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Doing Business

in the Philippines
A PROJECT BY CO-FUNDED BY EPBN PARTNER ORGANIZATIONS
Doing Business
in the Philippines
IN PARTNERSHIP WITH
T A B LE O F
C ONTENTS
6 MESSAGE FROM ECCP PRESIDENT
7 MESSAGE FROM EU AMBASSADOR

8 ABOUT EU-PHILIPPINES BUSINESS NETWORK

10 THE PHILIPPINES

14 SUMMARY OF STEPS IN STARTING A BUSINESS


16 FOREIGN INVESTMENTS IN THE PHILIPPINES
21 PRIVATE COMPANY INVESTMENTS
24 INCENTIVES UNDER SPECIAL REGISTRATIONS
29 PUBLIC COMPANY INVESTMENTS
32 FOREIGN EXCHANGE CONTROLS
34 TAXATION
36 BORDER CONTROL AND CUSTOMS REGULATIONS
38 EMPLOYMENT
46 IMMIGRATION
50 INTELLECTUAL PROPERTY
53 COMPETITION LAW
58 PRIVACY LAWS
61 ENVIRONMENTAL REGULATIONS
64 INDUSTRY SPECIFIC REGULATIONS
73 DISPUTE RESOLUTION
84 INSOLVENCY IN THE PHILIPPINES

93 SCHEDULE A
97 SCHEDULE B
102 LIST OF ACRONYMS
104 DIRECTORY OF CONTACTS

112 ABOUT QUISUMBING TORRES


114 ABOUT ECCP

DOING BUSINESS IN THE PHILIPPINES 5


M ESS A GE F R O M
E C C P P R ESI D ENT

Guenter Taus
ECCP President

The European Chamber of Commerce of the Philippines (ECCP),


in close partnership with the EU-Philippines Business Network, is
pleased to present its first ever edition of the Doing Business in the
Philippines booklet, a handy guide for those interested in exploring the
various business opportunities the country has to offer. We would like to
extend our sincerest thanks to Quisumbing Torres for being our content partner
for their invaluable support in completing this milestone publication.
Indeed, it is exciting to witness promising events unfold before our very eyes.
In 2017, we saw the 2nd round of negotiations of the EU-Philippine Free Trade
Agreement, the first full year of the current Administration, steady economic
growth, and the Philippines’ ASEAN chairmanship. Moreover, we have seen
progress in a number of positive reforms such as the Build Build Build program,
the comprehensive tax reform, as well as the release of Memorandum Order
No. 16, which seeks to reduce restrictions on foreign business activities in the
Philippines. Amidst the noise, I remain hopeful that we will continue to see
positive developments in the coming year.
The ECCP has long been involved in advocacies that aim to make the Philippines a
more competitive destination for local and foreign investments. We relentlessly
advocate for the creation of a competitive fiscal incentives regime, the full
enforcement of the Philippine Competition Law, the strengthening of the
sanctity of contracts, and intellectual property rights (IPR) protection, among
many others. The Chamber also maintains a strong business network that holds
great potential in translating to tangible business opportunities. Undoubtedly,
the ECCP remains committed in promoting the EU-PH economic ties through the
facilitation of market access and creation of a level playing field for both local
and foreign businesses.
For now, we hope this publication will inspire business around the globe to do
business here in the Philippines and serve as the first step into one of the most
dynamic and fastest growing countries in ASEAN.

6 DOING BUSINESS IN THE PHILIPPINES


M ESS A GE F R O M
EU A M B A SS A D O R

H.E. Franz Jessen


Ambassador / Head of Delegation
Delegation of the European Union to the Philippines

The EU economy is expected to grow by 2.3% in 2017 - an


impressive achievement of a mature economy; it follows years
of robust reforms. These ambitious reforms propelled the EU to
be the most competitive in the world, with business’ and consumers’
confidence improving rapidly. Unemployment rate is also expected to
average 9.1% this year, its lowest level since 2009. More importantly, EU’s trade
continues to grow strongly: EU exports to the world grew by 9% in the first
three quarters of 2017 while EU imports grew by 8.6% during the same period.
This shows that the EU economy is competitive, yet open and it will remain so
even in times of economic uncertainties brought about by protectionist stances
of other markets. The EU will continue to lead global efforts to promote open
trade and investment and this will contribute to the Philippines’ development
agenda.
The Philippines is at a crossroad, the successful move from a lower to upper
middle income country is dependent on choosing the right policy mix.
Implementation of sound policies could mean a potential take-off to upper
middle income level. The EU wants to contribute and we do: in the first three
quarters of 2017, our total trade with the Philippines grew by 18%, with exports
increasing by almost 35%. Thanks to the EU GSP+ preferences, the Philippines
has a solid trade surplus. Furthermore, the EU is also the largest investor in
the Philippines accounting for 29% of all approved foreign investments –
supporting more than 500,000 quality jobs in the country.
The EU sees trade and investment as part of the answer to challenges faced
in the country in terms of inclusive and pro-poor growth. Indeed, the EU and
its industry have a positive agenda that is values-based and comes with and
open dialogue to ensure nobody is left behind in strengthening these trade
relations.
The publication of this booklet comes at an opportune time as trade and
investment is becoming even more important for the EU and the Philippines
as drivers of inclusive growth and development. I hope this booklet will
increase understanding of our economic relations as well as identify further
opportunities to strengthen trade and investment to accelerate economic
development in both economies.

DOING BUSINESS IN THE PHILIPPINES 7


EU -P HILI PP INES
BUSINESS NET WORK

The EU-Philippines Business Network (EPBN) is a project The program is implemented by a consortium of the
co-funded by the European Union that provides a support 8 European chambers in the Philippines, led by the
framework for European companies, particularly SMEs European Chamber of Commerce (ECCP). Other partner
that are interested in exporting to or investing in the chambers include the British, French, German, Italian,
Philippines. Nordic, and Spanish Chambers of Commerce of the
Philippines along with the Belgian-Filipino Business Club.

8 DOING BUSINESS IN THE PHILIPPINES


EPBN activities and services include promoting
business opportunities in the Philippines in the
different EU countries by participating in trade fairs
and market briefings.
EPBN also provides local market support services to
potential EU investors and exporters, such as market
research, business matching, new-to-market and
business development support.
EPBN also advocates for and promotes the adaption
of relevant sector policies to level the playing field
and increase market access opportunities for EU
companies. Advocacy forums focusing on relevant
industry topics are regularly organized to address
issues and promote the constructive discussions
between government, relevant agencies, and the
different stakeholders. Annually, the EPBN publishes
its Business Advocacy Papers covering the various
issues and concerns of EU investors across 14
different high-priority business sectors.
Complementing the EPBN Guide on Doing Business
in the Philippines, are the Industry Business
Primers on these 14 high-priority sectors, which are
regularly updated to reflect the different business
opportunities in the Philippines for EU companies.
These 14 sectors include: agriculture, automotive,
consumer goods and retail, energy and renewables,
food and beverage, healthcare, human capital, ICT-
BPM-KPM, manufacturing, maritime, tax and financial
services, tourism, transportation infrastructure, and
water and environment.
For a free download of the EPBN Business Primers
and Advocacy Papers, visit our website at www.epbn.
ph.

DOING BUSINESS IN THE PHILIPPINES 9


THE P HILI PP INES
The Philippines continues to be Asia’s rising star due to its robust macroeconomic expansion in recent years, leaving
behind its former label as the region’s sick man, according to Moody’s Analytics. Indeed, during the last 7 years, the
resource-rich island nation has managed to trim its foreign debt and has shown an annual average economic growth
rate of 6.3%, one the highest in South-Asia and one of the fastest in the world, remaining in positive expansion even
during the global financial crisis.

104.9 million
Population Q3 2017 LUZON

MANILA

6.9%
Gross Domestic Product
Q3 2017

VISAYAS

56th
out of 138 countries in
the Global Competitiveness
Index 2017-2018 edition
(World Economic Forum) MINDANAO

10 DOING BUSINESS IN THE PHILIPPINES


In the third quarter of 2017, the Gross Domestic
Product (GDP) of the Philippines grew to 6.9%1 at USD
304,905 million2 despite weak external demand and
a reduction in agricultural production largely caused
by drought.3 Economic growth was driven by strong
domestic consumption, the boom in the Business
Process Outsourcing (BPO) industry, Overseas Foreign
Worker (OFW) remittances4 and the increase in public
infrastructure spending. The Philippines ranks as the
third largest economy in ASEAN based on GDP, following
Indonesia (USD 932,359 million) and Thailand (USD
406,840 million).5
Industry registered the fastest growth at 7.5% followed
by services with 7.1% growth.6 Meanwhile, agriculture
slowed down by 2.5% from 3.0% growth in the previous
year7. In 2016, the manufacturing subsector was the
largest contributor to the growth, mostly through food
manufacturing, which grew by 9.3%. Other industries such
as chemicals, rubber products, machinery, transportation
equipment, and construction also contributed to industry
growth8.
While the Philippines’ economic growth of the GDP grew
by 6.9%,9 registering the highest growth among ASEAN
member states, the Gross National Income (GNI) also
grew by 6.7% (based on current pesos).10
GDP per capita grew by 5.4% in Q3 of 2017. However,
the Philippines still remains the second lowest of ASEAN
6 at USD3,020, after Vietnam (USD2,310), compared to
USD6,340 in Thailand, USD3,860 in Indonesia, USD9,660
in Malaysia, and USD53,880 in Singapore.
Philippine inflation settled at 3.5% in the last quarter of
2017. According to the Philippine Statistics Agency, the
growth of inflation is due to the growth recorded in the
heavily-weighted food and non-alcoholic beverages index
and the higher prices of housing, utilities, transport,
education, and other miscellaneous services. In addition,
higher growth observed in alcoholic beverages, tobacco,
health, education and restaurant goods and services also
contributed to this.

1 Philippine Statistics Authority (16/11/2017). Philippine Economy Grows by 6.9% Asia. Retrieved 05 December 2017 from http://www.philstar.com/
in the Third Quarter of 2017. Retrieved 04 December 2017 from http://psa.gov. headlines/2017/11/11/1757872/charts-how-philippines-fares-southeast-asia.
ph/nap-press-release
6 Philippine Statistics Authority (16/11/2017). Philippine Economy Grows by 6.9%
2 Cigaral, I.N. (11/11/2017). In Charts: How the Philippines Fares in Southeast in the Third Quarter of 2017. Retrieved 04 December 2017 from http://psa.gov.
Asia. Retrieved 05 December 2017 from http://www.philstar.com/ ph/nap-press-release
headlines/2017/11/11/1757872/charts-how-philippines-fares-southeast-asia.
7 Ibid
3 ADB (2017). Asian Development Outlook 2017: Transcending the middle-
income challenge. P. 245-249. Retrieved: 28/07/2017. https://www.adb.org/sites/ 8 PSA (2016). Gross Value Added in Manufacturing. Retrieved 11/04/2017. http://
default/files/publication/237761/ado-2017.pdf. psa.gov.ph/nap-press-release/sector/Manufacturing.

4 Philippines, Philippine Statistics Agency . (2017 ). National Quickstat November. 9 Philippines, Philippine Statistics Agency. (2017). National Quickstat November.

5 Cigaral, I.N. (11/11/2017). In Charts: How the Philippines Fares in Southeast 10 Ibid

DOING BUSINESS IN THE PHILIPPINES 11


The Philippines’ current account surplus was recorded at
USD 601 million or 0.2% of GDP in 2016, 92% lower than
the USD 73 billion surplus or 2.5% of GDP in 2015. Exports
increased only on a small scale while imports rose rapidly,
resulting in a merchandise deficit of 11.2% of GDP (2016).
However, remittances and strong earnings from services
exports, particularly from the BPO and tourism sectors,
helped in maintaining the surplus.
On the other hand, the ratio of public debt to GDP
declined to 41.7% in the third quarter of 2017, which
allowed an increase in public spending. The Q3 fiscal
deficit of P58.6 billion decreased from P93.4 billion of the
same period last year.
The Big Three credit rating agencies, Standard & Poor’s,
Fitch and Moody’s, reaffirmed the Philippines’ sound
macroeconomic foundations and its strong external
position maintaining the country’s 2015 ratings.

Standard and
2016 April 24 BBB STABLE
Poor

2016 April 08 Fitch BBB- POSITIVE

2017 Mar 22 Moody BAA2 STABLE

With a population of 104.9 million in the third quarter


of 2017, a median age of 23.4, and with 89.74% of the
population under 54 years old, the Philippines offers a
skilled workforce, fluent in English, which is considered
as one of the competitive advantages of the Philippines.
Despite an educated labor force, unemployment among
people between 15 and 24 years old is still high at
5.6%.
However, underemployment in 2017 remained high at
16.3%, a difference of two points from last year’s 18%.
This reflects the prevalence of informality and precarious
jobs. On a positive note, the country has registered more
inclusive growth in the last years as the poverty incidence
among Filipinos dropped to 21.6% in 2015 from 25.2% in
2012, lifting 1.8 million Filipinos out of poverty.
In terms of international rankings, the Philippines ranked
56th out of 138 countries in the Global Competitiveness
Index 2017-2018 edition, published by the World Economic
Forum, with a score of 4.35 over 7. Out of the 12 pillars
that were assessed in the Index, the Philippines scored
highest in the third pillar, macroeconomic environment,
with a ranking of 22 and a score of 5.8, which reaffirms
the country’s sound macroeconomic fundamentals.
On the World Bank Doing Business 2018 Report, the
Philippines ranked 113 out of 190 countries with a
score of 58.74 over 100. Getting electricity, resolving
insolvency, and trading across borders had the highest
rankings in the said report.
As for the Corruption Perceptions Index, the Philippines
went from 95 out of 168 countries in 2015 to 101 among
176 in 2016.

Photo by Chelsea Murphy


12 DOING BUSINESS IN THE PHILIPPINES
DOING BUSINESS IN THE PHILIPPINES 13
01
SUMMARY
OF STEPS IN
STARTING A
BUSINESS
Philippine laws allow foreign investors to
engage in business in the Philippines, subject to
compliance with applicable laws and regulations.
As a rule, foreign investors may invest in any area
of activity in the Philippines, except only those
activities that are wholly or partially nationalized
under the Philippine Constitution and existing
laws and regulations.
Engaging in business in priority sectors may
qualify the business to avail of incentives by
registering with incentive giving government
agencies. These incentives may include fiscal and
non-fiscal incentives.
Generally, starting a business in the
Philippines involves the following steps:

1. Identifying the activities that the foreign investor will undertake in the Philippines;

2. Determining whether the proposed activities are subject to foreign equity restrictions
and special licensing or registration requirements;

3.
Registering the appropriate corporate vehicle in the Philippines with the Philippine
Securities and Exchange Commission (SEC), and subject to the applicable foreign equity
restrictions, if any, for the proposed activities in the Philippines;
Complying with the basic and mandatory post-SEC registration requirements with

4. various government agencies, such as the local government unit with jurisdiction over
the place of business, the Philippine Bureau of Internal Revenue (BIR), and employee-
welfare agencies; and

5. Obtaining the applicable special licensing or registration requirements for the proposed
activity in the Philippines.

DOING BUSINESS IN THE PHILIPPINES 15


02
FOREIGN
INVESTMENTS
IN THE
PHILIPPINES
LEGAL FRAMEWORK
Various Philippine laws govern foreign
investments and foreign nationals that engage in
business in the Philippines.
Foreign Investments Act
WHAT CONSTITUTES “DOING
Republic Act No. 7042, as amended, otherwise known
as the Foreign Investments Act of 1991 (FIA), primarily BUSINESS” IN THE PHILIPPINES
governs the participation of foreign nationals in economic
and commercial activities in the Philippines. The FIA
expresses the policy of the Philippine Government to
attract, promote, and welcome productive investments The Corporation Code requires foreign corporations
from foreign individuals, partnerships, corporations, that are “doing business” in the Philippines to obtain
and governments, including their political subdivisions, the appropriate license for this purpose from the SEC
in activities that significantly contribute to national (SEC License). To obtain an SEC License, a foreign
industrialization and socioeconomic development to the entity may register the appropriate corporate vehicle in
extent that foreign investment is allowed in such activity the Philippines. In the alternative, it may incorporate a
by the Constitution and relevant laws. Philippine corporation and engage in business through
such corporation.
To encourage foreign investments, Philippine laws
expressly recognize various rights of foreign investors
in the Philippines, including the right to repatriation of
investments, the right to remittance of earnings and The FIA and its implementing rules and regulations
freedom from expropriation (except for public use or of the Foreign Investments Act (FIA IRR) provide
in the interest of national welfare or defense, and upon a non-exclusive enumeration of specific activities
payment of just compensation). that constitutes doing business in the Philippines,
as follows:
Corporation Code of the
Philippines soliciting orders, service contracts, opening
A offices, whether called liaison offices or
The Corporation Code of the Philippines (Corporation
branches;
Code) governs the establishment, powers and governance
of corporations in the Philippines. It recognizes different
appointing representatives or distributors
classes of corporations, such as stock corporations, non- B domiciled in the Philippines or who in any
stock corporations and special corporations.
calendar year stay in the country for a period
Among the matters which are covered by the Corporation or periods totaling 180 days or more;
Code are those relating to incorporation requirements,
duties and qualifications of directors and officers,
meetings, quorum and voting requirements, rights of participating in the management, supervision
stockholders and dissolution. C or control of any domestic business, firm,
entity or corporation in the Philippines; and
The Corporation Code also regulates certain aspects
of the licensing and reporting requirements of foreign
corporations doing business in the Philippines.
any other act or acts that imply a continuity
D of commercial dealings or arrangements, and
CIVIL Code of the Philippines contemplate to that extent the performance
The Civil Code of the Philippines (Civil Code) governs of acts or works, or the exercise of some of
the establishment and operations of partnerships in the functions normally incident to, and in
the Philippines, the rights and obligations of partners, progressive prosecution of, commercial gain
governance and dissolution. or of the purpose and object of the business
organization.
Commercial contracts and arrangements of corporations
doing business in the Philippines will be subject to the Civil
Code provisions on obligations, contracts and damages,
and those that apply to special types of contracts such as
sales, agency, lease and loan.

SPECIAL LAWS
Special laws may apply to special types of corporations,
such as public companies, corporations with secondary
licenses, or those that engage in highly regulated business
activities.

DOING BUSINESS IN THE PHILIPPINES 17


The above enumeration is not exclusive. According to the A foreign entity that is found to be “doing business” in the
Philippine Supreme Court (Supreme Court), the true test Philippines without an SEC License:
for doing business is whether the foreign corporation
• is denied standing to bring suit before Philippine
is continuing the body of the business or enterprise
courts for the enforcement of its rights, but may be
for which it was organized and whether there exists a
sued before Philippine courts for any valid cause of
continuity of commercial dealings and arrangements
action;
which include acts that are normally incident to, and in
the progressive prosecution of, the purpose and object of Based on jurisprudence, the lack of standing to sue
its organization. may be cured by subsequently obtaining an SEC
License.
Also, under Philippine jurisprudence, an essential condition
to be considered as doing business in the Philippines is • may be subject to a fine and/or imprisonment for
the actual performance of specific commercial acts within not less than 30 days but not more than five years,
the Philippine territory because the Philippines does not in the discretion of the court. In case of foreign
have jurisdiction over commercial acts performed in corporations, the penalties are imposed on the
foreign territories. directors and officers responsible for the violation.

FOREIGN EQUITY
The following acts shall not constitute RESTRICTIONS
“doing business” in the Philippines
under the FIA IRR: GENERAL RULE
Foreign nationals may engage in any business activity in
mere investment as a shareholder by a
A the Philippines, provided that such activity is not reserved
foreign entity in domestic corporations
by law to Philippine citizens or to entities that are wholly
duly registered to do business, and / or the
or partly owned by Philippine citizens.
exercise of rights as such investor;
The FIA provides for the issuance of a Foreign Investment
having a nominee director or officer to Negative List (Negative List) – a list of economic activities
B represent its interest in such corporation; where foreign equity is either prohibited or limited to a
certain percentage. The Negative List has two component
appointing a representative or distributor lists: List A and List B. List A contains areas of investment
C domiciled in the Philippines which transacts where foreign ownership is limited by mandate of the
business in the representative’s or Philippine Constitution or by specific laws. List B contains
distributor’s own name and account; areas of investment where foreign ownership is limited for
reasons of security, defense, risk to health and morals, or
protection of local small- and medium-sized enterprises.
the publication of a general advertisement
D through any print or broadcast media;
Except with respect to activities where restrictions
on foreign equity are imposed under the Philippine
Constitution or statutes, the president of the Philippines
maintaining a stock of goods in the
E Philippines solely for the purpose of having
may amend the Negative List. Such amendments may not
be made more often than once every two years.
the same processed by another entity in the
Philippines;
Tenth Negative List of FIA
consignment by a foreign entity of Under the Tenth Negative List, which is the current
F equipment with a local company to be used Negative List, the following activities, among others,
in the processing of products for export; are limited to Philippine citizens or corporations or
associations that are wholly-owned by Philippine citizens:

G collecting information in the Philippines; and A. Mass media


B. Practice of certain professions
performing services auxiliary to an existing
H isolated contract of sale which are not on C. Retail trade enterprises with a paid-up capital of less
a continuing basis, such as installing in the than USD2.5 million.
Philippines machinery it has manufactured
or exported to the Philippines, servicing the
same, training domestic workers to operate
it, and similar incidental services.

18 DOING BUSINESS IN THE PHILIPPINES


On the other hand, the following activities, among others, Technology, or (ii) if it employs at least 50 direct
are subject to foreign equity restrictions: employees as certified by the appropriate regional
office of the Department of Labor and Employment
A. Private radio communications network (up to 20%
(DOLE).
foreign equity)
The foreign equity restrictions on domestic market
B. Private recruitment companies, whether for local or
enterprises that do not meet the relevant paid-up capital
overseas employment (up to 25% foreign equity)
requirement as discussed above do not apply to export
C. Advertising (up to 30% foreign equity) enterprises.

D. Exploration, development and utilization of natural Please refer to Schedule A for the Executive Order No.
resources (up to 40% foreign equity) 184 - Tenth Regular Foreign Investment Negative List

E. Ownership of private lands (up to 40% foreign Aside from the Negative List, the rules of the Philippine
equity) Contractors Accreditation Board (PCAB) provide that
persons who will engage in construction activities in the
F. Operation of public utilities (up to 40% foreign Philippines are also required to obtain a license from the
equity) PCAB, and as a general rule, the regular license is reserved
G. Educational institutions other than those established for and issued only to Filipino sole proprietorships or
by religious groups and mission boards (up to 40% partnerships/corporations with at least 60% Filipino
foreign equity) equity participation.

H. Contracts for the supply of materials, goods and Compliance with Foreign Equity
commodities to government-owned or controlled
corporations, companies, agencies or municipal Restrictions
corporations (up to 40% foreign equity) In recent decisions of the Philippine Supreme Court, it
I. Acting as facility operator of an infrastructure or has held that when the Constitution and the law speak of
a development facility requiring a public utility capital, generally, it refers to the number shares entitled
franchise (up to 40% foreign equity) to vote in the election of directors, or what we call “voting
shares,” as the voting rights translate to control over the
J. Ownership of condominium units where the corporation. In addition, the Supreme Court clarified that
common areas of the condominium project are co- Philippine citizens and Philippine nationals must also
owned by owners of the separate units or owned by exercise full beneficial ownership, and not merely legal
a corporation (up to 40% foreign equity) title, over the required Philippine portion of the capital.
In line with the above decisions, the SEC has issued SEC
The Tenth Negative List includes a general category Memorandum Circular No. 8, Series of 2013 (2013 SEC
of domestic market enterprises with a paid-in equity MC), which applies the required percentage of Filipino
capital of less than the equivalent of USD200,000, among ownership in partially nationalized activities to both (a)
the activities that are subject to a 40% foreign equity the total number of outstanding shares of stock entitled
limit. A domestic market enterprise is an enterprise to vote in the election of directors; and (b) the total
that produces goods for sale or renders services to the number of outstanding shares of stock, whether or not
domestic market entirely or, if exporting a portion of its entitled to vote in the election of directors.
output, fails to consistently export at least 60% thereof.
This is in contrast to an export enterprise, which is a The SEC Guidelines apply to all corporations engaged
manufacturer, processor or service (including tourism) in activities specifically reserved, wholly or partly, to
enterprise that exports 60% or more of its output, or a Philippine nationals by existing laws, and direct all
trader that purchases products domestically and exports corporate secretaries to monitor and observe compliance
60% or more of such purchases. with the provisions on ownership requirements provided
in existing laws.
Conversely, a foreign national or wholly foreign-owned
corporations may engage in a domestic market enterprise
in the Philippines, provided that the following conditions
are complied with:
A. It invests in a domestic market enterprise or an
export enterprise that is engaged in an activity that
is not on the Negative List.
B. The domestic market enterprise must have a
paid-in capital of the peso equivalent of at least
USD200,000. The capitalization requirements of
a domestic market enterprise may be reduced to
the peso equivalent of USD100,000: (i) if its activity
involves advanced technology as determined
and certified by the Department of Science and

DOING BUSINESS IN THE PHILIPPINES 19


Philippine National
Shares of stock that are owned by a Philippine national are general considered as Filipino-owned
The FIA defines a “Philippine national” as:
A. a citizen of the Philippines;
B. a domestic partnership or association wholly owned by citizens of the Philippines;
C. a corporation organized under the laws of the Philippines, of which at least 60% of the capital stock outstanding
and entitled to vote is owned and held by citizens of the Philippines;
D. a corporation organized abroad and registered as doing business in the Philippines under the Corporation Code,
of which 100% of the capital stock outstanding and entitled to vote is wholly owned by Filipinos; or
E. a trustee of funds for pension or other employee retirement or separation benefits where the trustee is a
Philippine national and at least 60% of the fund will accrue to the benefit of Philippine nationals.
Where a corporation and its non- Filipino stockholders own stocks in an enterprise registered with the SEC, at least 60%
of the capital stock outstanding and entitled to vote of each of both corporations must be owned and held by citizens
of the Philippines and at least 60% of the members of the Board of Directors must be citizens of the Philippines, in
order that the corporation shall be considered a Philippine national.

Anti-Dummy Law
The Philippines has an Anti-Dummy Law, which imposes
criminal and civil penalties on persons violating foreign
equity limitations.
Under the Anti-Dummy Law, a person who has, in his or
her name or under his or her control a right, franchise,
privilege, property or business, the exercise or enjoyment
of which is expressly reserved by law to Philippine citizens
or to corporations or associations where at least 60% of
the capital is owned by such citizens, is prohibited from: (a)
permitting or allowing the use, exploitation or enjoyment
of such right, franchise, privilege, property or business
by a person, corporation or association not possessing
the qualifications prescribed by law; or (b) in any manner
permitting or allowing any person not so qualified to
intervene in the management, operation, administration
or control of such right, franchise, privilege, property or
business, whether as an officer, employee or laborer, with
or without remuneration (except technical personnel
whose employment may be specifically authorized by the
Secretary of Justice).
However, foreign nationals may serve as members of
the board or governing body of corporations engaged in
partially nationalized activities in a number proportionate
to their actual and allowable equity in the company.

20 DOING BUSINESS IN THE PHILIPPINES


03
PRIVATE
COMPANY
INVESTMENTS
TYPES OF CORPORATE VEHICLES
Domestic corporation foreign currency. To fund its operations in the Philippines,
its head office or parent company must initially remit
An investor may establish a domestic corporation, which into the Philippines at least USD50,000 and thereafter,
is a corporation that is incorporated under Philippine USD50,000 annually.
laws.
Regional Operating Headquarters (ROHQ)
Assuming that the proposed activity is not subject to any
foreign equity limitation, a foreign investor wholly-own A multinational company may establish an ROHQ in the
the domestic corporation. Philippines to service its own affiliates, subsidiaries or
branches in the Philippines or in the Asia Pacific Region
If the proposed activity is subject to foreign equity and other foreign markets.
restrictions, the domestic corporation must comply with
the required Filipino ownership in such corporation. An ROHQ is allowed to derive income in the Philippines by
performing any of the following qualifying services:
Foreign Corporation i. General administration and planning
A foreign investor may also engage in business in the ii. Business planning and coordination
Philippines, which is not subject to foreign equity
restrictions, by registering different types of vehicles in iii. Sourcing/procurement of raw materials and
the Philippines. components

Branch Office iv. Corporate finance advisory services

A foreign investor may register a branch office to v. Marketing control and sales promotion
engage in activities that are not subject to foreign equity
vi. Training and personnel management
restrictions. A branch office is not considered as a separate
entity from the foreign corporation that registered the vii. Logistics services
same, but merely an extension of the legal personality of
viii. Research and development services and product
such foreign corporation. The scope of activities of the
development
branch office in the Philippines must be covered by the
scope of authorized activities of the foreign corporation ix. Technical support and maintenance
that registered the branch office.
x. Data processing and communication
Representative Office
xi. Business development
A representative office may be established to deal
directly with the clients of its head office who are in the
Philippines, and to undertake information dissemination An ROHQ is prohibited from offering qualifying services to
and promotion of the company’s products as well as entities other than its affiliates, branches, or subsidiaries,
quality control only. A representative office may not as declared in its registration with the SEC, nor shall it be
derive income in the Philippines and is fully subsidized by allowed to solicit or market goods and services directly
its head office. and indirectly, whether on behalf of its mother company,
A representative office must have an initial inward branches, affiliates, subsidiaries or any other company.
remittance of USD30,000 to fund its operations. An ROHQ must initially remit into the Philippines at least
Regional or Area Headquarters (RHQ) USD200,000.

A multinational company engaged in international Regional Warehouses


trade may establish a RHQ in the Philippines to act as A multinational company organized and existing under
an administrative branch of the multinational company any laws other than those of the Philippines, which is
and to serve principally as a supervision, communications engaged in international trade and supplies spare parts,
and coordination center for its subsidiaries, branches components, semi-finished products and raw materials
or affiliates in the Asia Pacific Region and other foreign to its distributors or markets in the Asia Pacific area
markets. and other foreign areas, and which has established or
The RHQ may not earn or derive income in the Philippines. will simultaneously establish a RHQ or ROHQ in the
It may not participate, in any manner, in managing any Philippines, may also establish a regional warehouse or
subsidiary or branch office it may have in the Philippines; warehouses in special economic zones (Ecozones) in the
neither may it solicit or market goods or services, whether Philippines.
on behalf of its parent company or its branches, affiliates,
subsidiaries or any other company.
Its expenses must be financed by the head office or
parent company from external sources in an acceptable

22 DOING BUSINESS IN THE PHILIPPINES


The activities of the regional warehouse shall be limited of the directors of a domestic corporation must be
to: Philippine residents.
i. serving as a supply depot for the storage, deposit For purposes of the residency requirements under the
and safekeeping of its spare parts, components, Corporation Code, current policies of the SEC consider
semi-finished products and raw materials, including a foreigner residing in the Philippines with a valid work
packing, covering, putting up, marking, labeling, permit / visa as a Philippine resident.
and cutting or altering to customer’s specification,
Corporate acts of a corporation generally require approval
mounting, and/or packaging into kits or marketable
of the board of directors, in a meeting held in person or
lots thereof; and filling up transactions and sales
by telephone conference.
made by its head offices or parent companies; and
For certain fundamental actions of the corporation,
ii. serving as a storage or warehouse of goods
approval of stockholders is also required in addition to
purchased locally by the home office of the
the approval of the board of directors.
multinational for export abroad.
The notice, quorum and voting requirements for such
The regional warehouse may not directly engage in trade
meetings of the board of directors and the stockholders
nor directly solicit business, promote any sale, nor enter
are governed by Corporation Code and the by-laws of the
into any contract for the sale or disposition of goods in
corporation.
the Philippines.
Foreign Corporations (e.g. branch office, representative
REGULATORY APPROVALS & office, etc.)
REGISTRATIONS The Corporation Code requires foreign corporations
The incorporation of a domestic corporation must be doing business in the Philippines to appoint a resident
approved by the SEC. agent in the Philippines to whom summons and legal
processes may be served.
A foreign corporation that will engage in business in
the Philippines through any of the corporate vehicles A registered foreign corporation, being an extension of
discussed above must register such corporate vehicle its foreign head office, is not required to have its own
with the SEC. board of directors or stockholders. Corporate governance
matters of such a foreign corporation are governed by the
After incorporation of a domestic corporation, and laws of incorporation of the foreign head office, subject
registration of a foreign corporation, with the SEC, the only to certain actions that require approval of the SEC.
corporation must comply with certain basic registration
and licensing requirements with various government
agencies. These post-registration requirements
include obtaining a local business permit from the local
government unit in the principal place of business of the
corporation, and certain registrations and licenses from
the BIR, and employee-welfare agencies.
In addition to the basic post-registration requirements,
certain businesses in highly regulated industries may be
subject to special licensing or registration requirements
with the government agency having jurisdiction over such
industry.

Corporate Structure:
Governance, Corporate
Officers, Stockholders
Domestic Corporations
The Corporation Code provides for the corporate
governance structure and requirements of a domestic
corporation.
All business conducted and all property of a domestic
corporation are generally controlled by the board of
directors, which shall consist of at least 5 but not more
than 15 individuals. Each director must hold at least one
share in the corporation. As a rule, foreign nationals
may be directors of a domestic corporation, subject to
applicable restrictions for corporations that engage in
nationalized or partially nationalized activities. Majority

DOING BUSINESS IN THE PHILIPPINES 23


04
INCENTIVES
UNDER SPECIAL
REGISTRATIONS

The Philippine Government has identified certain


priority sectors for investment in the Philippines,
and grants incentives to investments in such
sectors.
Omnibus Investments Code / 2017 Investments Priorities
Plan
The Omnibus Investments Code (OIC), through tax energy in its production, manufacturing, or processing
incentives and other benefits, encourages investments operations. Provided that, the final product in any of the
in preferred areas of economic activity specified in the foregoing instances involves or will involve substantial
Investment Priorities Plan of the Philippine Government use and processing of domestic raw materials, whenever
(IPP). The current 2017 Investment Priorities Plan is the available, taking into account the risks and magnitude of
current IPP. investment.
Qualified enterprises that will engage in preferred areas
of investment may register with the Board of Investments
(BOI) to avail of incentives.
In general, only Filipino citizens or corporations that
The 2017 IPP provides for the
are organized in the Philippines and that at least of following general areas for
the outstanding capital stock entitled to vote of which investment that may be entitled to
corporation is owned and held by Philippine nationals,
can register with the BOI. incentives:
A. Preferred Activities

An investor that does not meet the said nationality 1. All qualified manufacturing activities including agro-
requirement may still register under the IPP provided processing
that: 2. Agriculture, Fishery and Forestry
1. It will engage in a pioneer project; 3. Strategic Services
2. It obligates itself to attain the status of a Philippine • Integrated Circuits (IC) Design
national within thirty (30) years from the date of
registration or within such longer period as the BOI • Creative Industries/Knowledge-Based Services
may require; and
• Maintenance, Repair, and Overhaul (MRO) of
3. The pioneer area it will engage in is one that is not aircraft
within the activities reserved by the 1987 Philippine
• Charging/Refueling Stations for Alternative Energy
Constitution or other laws of the Philippines to
Vehicles
Philippine citizens or corporations owned and
controlled by Philippine citizens. • Industrial Waste Treatment
• Telecommunications
Under the OIC, an enterprise may apply for registration • State-of-the-art Engineering, Procurement, and
either as a pioneer or non-pioneer enterprise. A “pioneer Construction
enterprise” is a registered enterprise: (i) engaged in
the manufacture, processing, or production, and not 4. Healthcare Services including Drug Rehabilitation
merely in the assembly or packaging of goods, products, Centers
commodities, or raw materials that have not been or are 5. Mass Housing
not being produced in the Philippines on a commercial
scale; or (ii) using a design, formula, scheme, method, 6. Infrastructure and Logistics including LGU-PPPs
process, or system of production or transformation 7. Innovation Drivers
of any element, substance, or raw materials into
another raw material or finished goods that are new 8. Inclusive Business (IB) Models
and untried in the Philippines; or (iii) engaged in the 9. Environment or Climate Change-Related Projects
pursuit of agricultural, forestry, and mining activities
and/or services, including the industrial aspects of food 10. Energy
processing whenever appropriate, predetermined by the
BOI, in consultation with the appropriate department, to
be feasible and highly essential to the attainment of the
national goal, in relation to a declared specific national
food and agricultural program for self-sufficiency and
other social benefits of the project; or (iv) producing
non-conventional fuels or manufacturing equipment that
utilizes non-conventional sources of energy or using or
converting to coal or other non-conventional sources of

DOING BUSINESS IN THE PHILIPPINES 25


B. Export Activities E. Tax Incentives
1. Production and manufacture of export products An enterprise registered with the BOI may be entitled to
the following tax and non-tax special incentives:
2. Service exports
1. Income tax holiday consisting of income tax exemption
3. Activities in support of exporters
for six years from the start of commercial operations for
C. Special Laws pioneer firms, and four years for non-pioneer firms. This
incentive may be extended in certain instances and upon
1. Industrial Tree Plantation (P.D. 705); approval by the BOI.
2. Mining (R.A. 7942) (limited to capital equipment Expanding firms are entitled to an exemption from
incentive); income taxes proportionate to their expansion for a
3. Publication or Printing of Books/Textbooks (R.A. period of three years from the start of commercial
8047); operations of the expansion. However, they are not
entitled to additional deductions for incremental labor
4. Refining, Storage, Marketing and Distribution of expenses during the period that they avail themselves of
Petroleum Products (R.A. 8479); this incentive.
5. Rehabilitation, Self-Development and Self-Reliance The income tax holiday may not be extended for more
of Persons with Disability (R.A. 7277); than eight years.
6. Renewable Energy (R.A. 9513); and 2. Exemption from taxes and duties on spare parts and
7. Tourism (R.A. 9593). consumable supplies imported by a registered enterprise
with a customs-bonded manufacturing warehouse and
D. Autonomous Region of Muslim Mindanao (ARMM) exporting at least 70% of its production
List
3. Exemption from taxes and duties on machinery,
1. Export Activities equipment, spare parts and accessories imported by new
and expanding registered enterprises
• Export Trader and Service Exporters
4. For the first five years from registration, an additional
• Support Activities for Exporters
deduction from taxable income of 50% of the wages of
2. Agriculture, Agribusiness, Aquaculture, and Fishery additional skilled and unskilled workers in the direct labor
force. This incentive is granted only if the registered
3. Basic industries
enterprise meets a prescribed capital-to-labor ratio.
4. Infrastructure and services
5. Exemptions from taxes and duties on the importation
5. Industrial service facilities of breeding stocks and genetic materials within 10 years
from the date of registration or commercial operation
6. Engineering industries
6. Tax credit for taxes and duties on raw materials,
7. Logistics supplies and semi-manufactured products used for the
8. BIMP-EAGA Related Investment Enterprises manufacture of export products and forming part thereof

9. Tourism 7. For registered enterprises with bonded manufacturing


warehouses, exemption from taxes and duties on the
10. Health and education services and facilities importation of supplies and spare parts for imported
11. Halal industry equipment and consigned equipment

12. Banking, non-bank financial institutions and 8. Exemption from wharfage duties and any export
facilities tax, duty, impost and fees on exports by a registered
enterprise of its non-traditional export products
13. Energy
9. Exemption from local taxes for six years from the date
of registration for pioneer enterprises, and four years for
non-pioneer enterprises
Please refer to Schedule B - 2017 Investment Priorities
Plan for the specific scope, conditions and limitations
of the above areas of investment that will be entitled
to incentives.

26 DOING BUSINESS IN THE PHILIPPINES


F. Non-tax Incentives physical, mechanical, or electromagnetic characteristics
and/or chemical properties. “Assembly” is the process by
1. Simplified customs procedures for the importation of
which semi-finished parts or materials are put together or
equipment, spare parts, raw materials, and supplies, and
combined to form a distinct product without substantially
the export of processed products
changing their physical or mechanical characteristics or
2. No restriction on the use of consigned equipment but electromagnetic and/or chemical properties.
re-export bond is required
2. Information Technology (IT) Service Export Enterprise
3. Employment of foreign nationals in supervisory,
An IT Service Export Enterprise is a company operating or
technical, or advisory positions for five years from
offering IT services, of which 70% of total revenues are
registration, extendible for limited periods. The president,
derived from clients abroad. “IT Service Activities” are
general manager and treasurer (or their equivalent) of
activities that involve the use of any IT software and/or
foreign-owned registered firms are not subject to the
system for value addition. Among the IT Service Activities
foregoing limitations.
eligible for incentives are IT-enabled services such as
4. The privilege to operate bonded manufacturing/trading business process outsourcing, call centers, data encoding,
warehouses, subject to customs rules and regulations transcribing, and processing; software development and
application, including programming and adaptation of
G. Additional Incentives system software and middleware; content development
The following additional incentives are available to for multimedia or Internet purposes; and others.
projects (excluding mining, forestry, and processing of 3. Tourism Enterprise
minerals and forest products) located in less-developed
areas: 4. Medical Tourism Enterprise

1. Double deduction from taxable income of 50% of the 5. Agro-industrial Export Manufacturing Enterprise
wages corresponding to the increment in the number of
6. Agro-industrial Biofuel Manufacturing Enterprise
direct labor
7. Logistics and Warehousing Services Enterprise
2. Deduction of the cost of necessary and major
infrastructure works constructed 8. Economic Zone Development and Operation, such as:
• Manufacturing Economic Zone
PEZA Registration • IT Park
Investors may also register with the Philippine Economic • Tourism Economic Zone
Zone Authority (PEZA) to avail of incentives for activities
that are conducted within PEZA Ecozones and PEZA- • Medical Tourism Economic Zone
registered buildings. • Agro-Industrial Economic Zone
Registrable Activities • Retirement Economic Zone
To disperse industry and generate employment in non- • Facilities Providers, such as:
urban areas, the government has established several
Ecozones. An Ecozone or Special Economic Zone is a • Facilities for Manufacturing Enterprises
selected area with highly developed or which have the • Facilities for IT Enterprises
potential to be developed into agro-industrial, industrial,
tourist, recreational, commercial, banking, investment • Retirement Facilities
and financial centers whose metes and bounds are fixed 10. Establishment, operation, and maintenance of light
or delimited by Presidential Proclamations. and power systems, and water supply and distribution
Enterprises that establish their businesses within an systems inside Special Economic Zones.
Ecozone may register with the PEZA as any of the Tax and other incentives
following:
As a general rule, an Ecozone Enterprise (except a
1. Export Manufacturing Enterprise Logistics and Warehousing Services Enterprise, an
An Ecozone Manufacturing Enterprise is an entity Ecozone Developer and Operator, a Facilities Provider
engaged in the assembly, manufacturing or processing and an Ecozone Utilities Enterprise) is entitled to income
activities resulting in the exportation of at least 70% of its tax holiday, which may have a duration of four years for
production. “Manufacturing or processing” is the process new registered non-pioneer firms or six years for new
by which raw materials or semi-finished materials are registered pioneer firms. Expanding firms may be entitled
converted into a new product through a change in their to an income tax holiday of three years from the start of
commercial operation of the expansion.
Upon expiry of the income tax holiday, an Ecozone
Enterprise becomes entitled to a preferential rate of 5%
of gross income in lieu of all national and local taxes.

DOING BUSINESS IN THE PHILIPPINES 27


Ecozone Enterprises (except Logistics and Warehousing
Services Enterprises, Ecozone Developers and Operators, Other registrations
Facilities Providers, and Ecozone Utilities Enterprises) are In addition to registration with the BOI and the PEZA,
further entitled to the following incentives: investors that locate their operations in other special
economic zones may also be entitled to incentives.
1. VAT zero rating of local purchases of goods and
services1; Enterprises registered with the Subic Bay Metropolitan
Authority
2. Exemption from duties and taxes on importation
of merchandise, raw materials, and supplies of The Subic Special Economic Zone (SSEZ) and Subic
equipment and machineries, including importation of Freeport Zone (SFZ) were established by the Philippine
capital equipment, construction materials, specialized government with the aim of developing the area into
office equipment and furniture, specialized vehicles a self-sustaining industrial, commercial, financial and
and other transportation equipment, professional investment center in the Philippines. In addition, the
instruments, and household effects; SFZ was established to be operated and managed as
a separate customs territory ensuring the free flow or
3. Tax credit for import substitution;
movement of raw materials, capital, equipment and
4. Exemption from wharfage dues, export tax, impost, consumer items within, into, and exported out of the SFZ.
or fee;
The territory of the SSEZ includes the city of Olongapo
5. Additional deduction for training expenses; and the municipality of Subic, and the former US Naval
Base at Subic Bay as well as its extensions located in
6. Tax credit on domestic capital equipment, breeding the municipalities of Hermosa and Morong in Bataan
stocks and genetic materials (as applicable); Province. The SFZ is an area within the SSEZ that is fenced
7. Additional deduction for labor expenses; in and designated as a Freeport Zone.

8. Unrestricted use of consigned equipment; A business enterprise may register with the Subic Bay
Metropolitan Authority (SBMA) as an Ecozone Enterprise
9. Employment of foreign nationals in executive, in the SSEZ, or a Freeport Enterprise in the SFZ.
supervisory, technical and advisory positions,
provided that the total number of foreign nationals A SSEZ Enterprise is a business entity located within the
employed by an Ecozone Enterprise does not at any SSEZ that is duly registered with the SBMA to operate
time exceed 5% of its workforce. any lawful economic activity within the SSEZ. An SFZ
Enterprise is a business entity located within the SFZ
that is duly registered with the SBMA. Registration as an
SSEZ/SFZ Enterprise is open to any business enterprise in
any area of economic activity, subject only to limitations
under the Philippine Constitution.
An SSEZ Enterprise shall be entitled to the 5% special tax
on gross income earned, in lieu of national and local taxes,
while an SFZ Enterprise shall be entitled to: (i) tax- and
duty-free importation within the SFZ; and (ii) 5% special
tax on gross income earned, in lieu of national and local
taxes.
Enterprises Registered in the Clark Special Economic
Zone
The Clark Special Economic Zone (CSEZ) covers certain
areas of Angeles City, the municipalities of Mabalacat and
Porac in Pampanga province, and the municipalities of
Capas and Bamban in Tarlac province.
A portion of the CSEZ has been converted into a freeport
zone called the Clark Freeport Zone. The Clark Freeport
Zone is operated and managed as a separate customs
territory, with the following incentives available to
registered business enterprises located therein: (i) tax
rate of 5% on gross income earned, in lieu of national and
1 Please note that Republic Act (“RA”) No. 10963 as amended by a presidential
veto of certain items, appears to remove the VAT zero-rating privilege of the local taxes; and (ii) tax- and duty-free importation of raw
sale of goods and services to registered enterprises within a separate customs materials and capital equipment. The government agency
territory as provided under special law. This has created some uncertainty on the
VAT exemption of PEZA enterprises because RA No. 10963 did not repeal the RA
that registers enterprises and grants and administers
No. 7916 (as amended by RA No. 8748) which states that economic zones are incentives to those enterprises is the Bases Conversion
operated and managed as a separate customs territory. Thus, there are conflicting and Development Authority (BCDA), with the Clark
opinions on whether services rendered to PEZA enterprises may qualify for 0%
VAT or will be subject to 12% VAT. Development Corporation (CDC) as its implementing
arm.

28 DOING BUSINESS IN THE PHILIPPINES


05
PUBLIC
COMPANY
INVESTMENTS

Investments in public companies are subject to


the same foreign equity restrictions as those
applicable to private companies. In terms of
corporate governance and share acquisitions and
transfers, they are subject to additional or stricter
rules that are essentially intended to protect
public investors.
Mandatory Tender Offer Corporate Structure:
Under the Philippine Securities Regulation Code (SRC), Governance, Officers,
any person or group of persons acting in concert, who Stockholders
intends to acquire any of the following amounts of shares
in a public company must do a tender offer prior to “Beneficial owner” is defined in the SRC rules as any
completing the proposed acquisition: person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise,
A. at least 15% of the shares in the public company has or shares voting power (which includes the power
in one or more transactions within a period of 12 to vote, or to direct the voting of such security) and /or
months; investment returns or power (which includes the power
B. at least 35% of the outstanding voting shares in the to dispose of, or to direct the disposition of such security).
public company, or such outstanding voting shares The report referred to above must be filed with the
that are sufficient to gain control of the board of Philippine Securities and Exchange Commission (SEC), the
directors of the public company, in one or more Philippine Stock Exchange (PSE), and the public company.
transactions within a period of 12 months;
A. The board of directors is primarily responsible for
C. at least 35% of the outstanding voting shares in the governance of the company. It should be composed
public company, or such outstanding voting shares of a majority of non-executive directors who
that are sufficient to gain control of the board of possess the necessary qualifications to effectively
directors of the public company, directly from one participate and help secure objective, independent
or more stockholders; judgment on corporate affairs and to substantiate
D. such amount of the outstanding shares in the public proper checks and balances. It should have at least
company that will result in the acquiring party three independent directors, or such number as to
owning more than 50% of the total outstanding constitute at least one-third of the members of the
shares. board of directors, whichever is higher.

The SRC lists down specific types of acquisitions that are B. A public company should have the following
exempt from the tender offer requirement, including, committees:
among others, (i) purchases through an open market at the • Audit Committee;
prevailing market price, and (ii) merger or consolidation.
• Corporate Governance Committee;
Reporting of Acquisition of • Board Risk Oversight Committee; and
Substantial Shareholdings • Related Party Transaction Committee.
A person is required to file a report his acquisition of C. The board of directors should establish corporate
beneficial ownership of shares in a public company the disclosure policies and procedures to ensure a
following instances: comprehensive, accurate, reliable and timely report
A. upon acquisition of 5% beneficial ownership; to shareholders and other stakeholders that gives a
fair and complete picture of a company’s financial
B. upon any increase (to less than 10%) or decrease in condition, results and business operations.
beneficial ownership;
D. The board must appoint a compliance officer, who
C. upon acquisition of at least 10% beneficial shall be responsible for monitoring, reviewing,
ownership; evaluating and ensuring the compliance by the
company, its officers and directors with the relevant
D. upon any change in the 10% beneficial ownership;
laws, rules and regulations and all governance
and
issuances of regulatory agencies, and the Code
E. upon change in the information submitted in an of Corporate Governance for Publicly Listed
earlier beneficial ownership report. Companies.
“Beneficial owner” is defined in the SRC rules as any E. The company should establish standards for the
person who, directly or indirectly, through any contract, appropriate selection of an external auditor,
arrangement, understanding, relationship or otherwise, and exercise effective oversight of the same to
has or shares voting power (which includes the power strengthen the external auditor’s independence
to vote, or to direct the voting of such security) and /or and enhance audit quality.
investment returns or power (which includes the power
F. The board of directors should oversee that an
to dispose of, or to direct the disposition of such security).
appropriate internal control system is in place,
The report referred to above must be filed with the including setting up a mechanism for monitoring
Philippine Securities and Exchange Commission (SEC), the and managing potential conflicts of interest of
Philippine Stock Exchange (PSE), and the public company. Management, board members, and shareholders.

30 DOING BUSINESS IN THE PHILIPPINES


G. The board of directors should ensure that basic require compliance with the form and content for
shareholder rights are disclosed in the Manual disclosures the SEC may prescribe, (ii) any security or
on Corporate Governance and on the company’s its derivatives the sale or transfer of which, by law,
website. It should encourage active shareholder is under the supervision and regulation of the Office
participation. of the Insurance Commission, Housing and Land Use
Rule Regulatory Board, or the Bureau of Internal
H. The board of directors should identify the company’s
Revenue; (ii) any security issued by a bank except its
various stakeholders and promote cooperation
own shares of stock;
between them and the company in creating wealth,
growth and sustainability. B. if the securities are to be offered or sold in a
transaction that is exempt as listed in Section
Disclosure obligation of public 10.1 of the SRC, including, among others,(i) the
companies distribution by a corporation actively engaged in the
business authorized by its articles of incorporation,
Public companies are required to comply with the of securities to its stockholders or other security
following disclosure requirements: holders as a stock dividend or other distribution
out of surplus, (ii) the sale of capital stock of a
A. structured/regular continuing disclosure
corporation to its own stockholders exclusively,
requirements, including submission of (i) periodic
where no commission or other remuneration is paid
and other reports and (ii) submission of beneficial
or given directly or indirectly in connection with the
ownership report; and
sale of such capital stock, (iii) the sale of securities
B. unstructured/current continuing disclosure by an issuer to fewer than twenty (20) persons in the
requirements (relating to every material fact or Philippines during any twelve-month period (private
event that occurs which would reasonably be placemen), and (iv) the sale of securities to any
expected to affect investors’ decision in relation to number of qualified buyers (as this term is defined
the shares). in SRC rules); or
In addition, in the event a news report appears in the C. if the securities are to be offered or sold in a
media involving an alleged material event, which report transaction that is not an exempt transaction
would create public speculation if not officially denied or under Section 10.1 but which transaction the SEC,
clarified by the issuer, and the issuer has not yet submitted pursuant to its power under Section 10.2 of the SRC,
a current report therefor, the SEC may require the issuer exempts from the registration requirement on the
to file such a report within the period prescribed, in order ground that the SEC finds that requiring registration
to clarify the news report. is not necessary in the public interest or for the
protection of the investors such as by reason of the
Registration of securities small amount involved or by the limited character of
the offering.
Items 1.1. to 1.4 above cover certain topics that may be
relevant to foreign companies that intend to invest in If the company intends to list the securities on the PSE,
public companies in the Philippines. it must comply with the listing requirements under PSE
rules.
In cases where, instead of investing in shares in a public
company in the Philippines, the foreign company would
like to offer its shares or other types of securities to
persons in the Philippines, or would like its subsidiary in
the Philippines to go public, then it should be aware of
the requirement for the registration of securities under
the SRC.
Under the SRC, as a rule, no securities shall be sold or
offered for sale or distribution within the Philippines
unless such securities shall have been registered with
the SEC. By way of exception, registration of securities
with the SEC is not required under any of the following
circumstances, notwithstanding that the subject
securities are sold or offered for sale or distribution
within the Philippines:
A. if the securities are of a class of securities that is
exempt as listed in Section 9.1 of the SRC, including,
among others, (i) any security issued or guaranteed
by the government of any country with which the
Philippines maintains diplomatic relations, or by any
state, province or political subdivision thereof on
the basis of reciprocity, provided, that the SEC may

DOING BUSINESS IN THE PHILIPPINES 31


06
FOREIGN
EXCHANGE
CONTROLS
Cross border remittance of Philippine peso (PHP)
Under the regulations of the Bangko Sentral ng Pilipinas
(BSP or the Central Bank of the Philippines), PHP in
the amount of more than PHP50,000 may be remitted
into and out of the Philippines only with BSP approval.
BSP approval is generally granted only under specific
conditions - for testing or calibration of money or for
numismatics.

Cross border remittance of foreign exchange


The Manual of Regulations on Foreign Exchange However, prior BSP approval and / or registration with the
Transactions issued by the BSP (MORFXT) generally BSP of foreign loans is required to enable the borrower to
allows the electronic transfer of foreign currency into or purchase foreign exchange from the Philippine banking
out of the Philippines without prior approval from the system to service payment of the principal and interest
BSP. on foreign loans. Further, registration of foreign direct
investments with the BSP is required if the investee firm
On the other hand, a person, who brings into or takes
needs to purchase foreign exchange from the Philippine
out of the Philippines foreign currency and other foreign
banking system to fund the repatriation of capital and
currency-denominated bearer monetary instruments,
the remittance of profits, dividends and earnings which
through means other than electronic transfer of funds,
accrue thereon.
in excess of USD10,000 or its equivalent is required to
declare the same in writing and to furnish information on Obtaining prior BSP approval and/or registration of foreign
the source and purpose of the transport of such currency loans and registration of foreign direct investments with
or monetary instrument. the BSP are not mandatory. These requirements apply
only if foreign exchange to service payments on the
Trade Transactions
foreign loan and in respect of foreign direct investment,
Under BSP regulations, provided that the subject of the to fund repatriation of capital and remittance of profits,
importation is not a prohibited commodity and subject dividends and earnings which accrue thereon, will be
to compliance with the relevant guidelines of the BSP, purchased from the Philippine banking system.
residents are generally allowed to purchase foreign
Outward Investments
exchange from the Philippine banking system without
prior BSP approval to fund payments for imports under BSP regulations allow residents to invest in (i) debt
certain arrangements. These arrangements include and equity securities issued offshore by non-residents,
letters of credit, documents against payment, documents (ii) offshore foreign currency-denominated mutual
against acceptance, direct remittance, advance payment, funds and UITFs, (iii) foreign currency-denominated
and open account (including intercompany netting intercompany loans to offshore parent companies/
arrangement among non-bank related parties). subsidiaries of residents with an original tenor of at least
one year, (iv) investments in real property abroad, and (v)
As regards export trade transactions, payments for
foreign currency-denominated investment instruments
exports made under certain arrangements, such as letters
issued onshore by non-residents without BSP approval if
of credit, documents against payment or cash against
such investments are funded by:
documents, documents against acceptance, and open
account arrangements, are generally allowed without A. the resident’s foreign currency deposit account and/
prior BSP approval, provided that the subject of the or
exportation is not a prohibited commodity.
B. foreign exchange of up to USD 60,000,000
Non-trade Transactions purchased from the Philippine banking system per
investor per year.
BSP regulations generally allow residents to purchase
foreign exchange from the Philippine banking system Qualified investors, such as insurance and pre-need
without prior BSP approval if the foreign exchange will companies, collective/pooled funds, public or private
be used to fund payments to non-resident beneficiaries pension or retirement or provident funds, may apply with
for non-trade transactions enumerated in the relevant the BSP for a higher annual investment limit.
regulations of the BSP, subject to submission of
an application to purchase foreign exchange and
documentary requirements to the selling bank.

DOING BUSINESS IN THE PHILIPPINES 33


07
TAXATION
Corporate Income Tax Value Added Tax (VAT)
A domestic corporation is taxed on its net income (gross VAT is a tax on consumption levied on the sale, barter,
income less allowable deductions) from all sources at exchange or lease of goods or properties and services in
the rate of 30%. A resident foreign corporation, such as the Philippines, and on the importation of goods into the
a branch, is taxed only on its net income from Philippine Philippines.
sources at the same rate as a domestic corporation.
A person becomes subject to the 12% VAT when his or
A non-resident foreign corporation is subject to final her gross sales or receipts for the past 12 months exceed
withholding tax on its gross income (without the benefit PHP3,000,000.
of deductions) from Philippine sources at the rate of 30%.
A VAT taxpayer is allowed input VAT credits against his or
A foreign corporation is considered a resident when it her output VAT liability, subject to certain limitations.
is engaged in trade or business in the Philippines and
is licensed by the Philippine SEC to engage in trade or Local & Real Property Taxes
business in the Philippines.
Local government units, such as provinces, cities,
municipalities and barangays, may also levy taxes
Individual Income Tax and impose local license fees pursuant to the Local
A resident citizen is taxed on income from all sources at Government Code. Furthermore, real property tax applied
progressive rates ranging from 5 to 32% of net taxable solely to the lands, buildings and other improvements
income. thereon is levied on the assessed value of the real
property.
A non-resident alien engaged in trade or business in the
Philippines is generally subject to tax on net income from Treaties
Philippine sources at the same progressive tax rates
imposed on resident aliens and citizens. A non-resident Currently, the Philippines has entered into tax treaties
alien is deemed engaged in trade or business if he or she with 41 countries which include the following members
stays in the Philippines for an aggregate period of more of the EU: Austria, Belgium, Czech Republic, Denmark,
than 180 days during any calendar year. Finland, France, Germany, Hungary, Italy, Netherlands,
Poland, Romania, Spain, Sweden, and the United
A non-resident alien not engaged in trade or business in Kingdom. Under these treaties, the final withholding tax
the Philippines is taxed on gross income from Philippine on dividends, interest and royalties can be as low as 10%.
sources at the rate of 25%, withheld at source.

DOING BUSINESS IN THE PHILIPPINES 35


08
BORDER
CONTROL AND
CUSTOMS
REGULATIONS

In addition to the 12% VAT and any applicable


excise tax, importations are generally subject to
customs duties. The Customs Modernization Act
provides for the imposition of anti-dumping duty,
countervailing duty, marking duty, safeguard
duty and discriminating duty under special
circumstances.
The rules of the Bureau of Customs (BOC) on
border control measures prevent the entry into
the Philippines of infringing merchandise and
ensure expedited procedures for the handling
and disposition of goods suspected to be
imported in violation of the Intellectual Property
Code of the Philippines (the IP Code).
The Strategic Trade and Management Act likewise oils, textiles, garments, headwear, footwear, furniture,
provides a mechanism for trade control in the importation, umbrellas, and chemicals.
exportation, re-exportation, reassignment, transit and
The Philippines, meanwhile, has signed a free trade
transshipment of strategic goods and the provision of
agreement with the European Free Trade Association
related services.
(EFTA) Member States - Iceland, Liechtenstein, Norway
Strategic goods are goods enumerated in the National and Switzerland, on 28 April 2016. The Parties are currently
Strategic Goods List, which has yet to be issued by the undertaking their respective domestic processes for the
National Security Council - Strategic Trade Management ratification and entry into force of the Agreement.
Committee. These are products that, for security reasons
The Philippines’ engagement with EFTA is part of
or due to international agreements, are considered to
a parallel three-pronged approach to increase the
be of such military importance that their export is either
country’s presence in the European region through the
prohibited altogether or subject to specific conditions.
FTA engagements with EFTA and the European Union
Such goods are generally suitable to be used for military
(EU) and the EU Generalized System of Preferences.
purposes or for the production of weapons of mass
destruction. New enterprises operating in the special zones may enjoy
income tax holidays for up to eight years from the start of
Related services refer to brokering, financing, and
commercial operations. The enterprises are also entitled
transporting in relation to the movement of strategic
to a preferential tax treatment of 5% tax on gross income
goods between two foreign countries and providing
in lieu of all other Philippine income taxes.
technical assistance.
Goods that are imported into special economic zone are
Customs and Trade Agreements generally not subject to duty or tax while they remain
The Philippines is a member of the Association of inside the zones. However, they will become subject to
Southeast Nations (ASEAN) and is a signatory to the duties and taxes if they are removed from the ecozone.
ASEAN Trade in Goods Agreement (previously referred
to as the ASEAN Free Trade Area Common Effective
Preferential Tariff Scheme) along with the other ASEAN
member states. The ASEAN aims to eliminate all import
duties amount the member states.
In addition, as part of the ASEAN, the Philippines has
existing FTAs with China (ASEAN-China), South Korea
(ASEAN-Korea), Japan (ASEAN-Japan Comprehensive
Economic Partnership), Australia and New Zealand
(ASEAN-Australia and New Zealand), and India (ASEAN-
India).

Special discussion regarding EU


The EU-Philippines Free Trade Agreement negotiations
was launched in December 2015. A series of negotiation
rounds are being undertaken with the aim to conclude
an agreement that covers relevant trade issues such
as tariffs, non-barriers to trade, trade in services
and investment as well as trade aspects of public
procurement, intellectual property, competition and
sustainable development. The Philippine Senate recently
ratified the Framework Agreement on Partnership and
Cooperation Between the Philippines and the European
Union (PCA). The PCA should bolster the Philippines’
status as a beneficiary country under the EU’s Generalised
Scheme of Preferences Plus (GSP+) and provide basis for
concluding a Free Trade Agreement (FTA) with the EU.

EU GSP+
The EU has also granted the Philippines zero tariff for over
6000 products to be exported to any of the 28 member
states under the Generalized System of Preferences
Plus (GSP+). Products that may avail of the duty free
access include coconut and marine products, processed
fruit, prepared food, animal and vegetable fats and

DOING BUSINESS IN THE PHILIPPINES 37


09
EMPLOYMENT
Labor Standards
The Labor Code of the Philippines (Labor Code) lays F. workers who are paid by results, as determined
down the minimum terms, conditions and benefits of by the Secretary of the DOLE in appropriate
employment that employers must provide or comply with regulations.
and to which the employees are entitled as a matter of
Non-exempt employees are the workers who do not fall
right.
in the above enumeration.
Compensation Entitlement of employees to overtime pay depends
The Philippines has a minimum wage law. The minimum on the nature of their duties and responsibilities. If the
wage rate varies from one region of the country to employees’ duties and responsibilities do not qualify
another and is set by the relevant Regional Tripartite them as exempt employees, they are entitled to overtime
Wages and Productivity Board. An employer may not pay pay. Conversely, should these employees’ duties and
lower than the minimum wage the Regional Tripartite responsibilities qualify them as exempt employees, they
Wages and Productivity Board has set for the region are not entitled to overtime pay.
where its workers are working. Under the most recent Furthermore, employers may not require employees
wage order for the National Capital Region (i.e., Metro to perform overtime work except in certain cases and
Manila), the minimum gross basic wage is PhP 502 per day provided appropriate compensation is paid. In practice,
plus cost of living allowance of PhP 10 per day. they ask employees to sign employment contracts where
Wages should be paid in legal tender (i.e., cash) at least the employees agree to perform overtime work.
once every two weeks or twice a month at intervals not
exceeding 16 days.
Night Shift Differential
If a non-exempt employee performs work between
Work Hours and Overtime 10 p.m. and 6 a.m., he or she must be paid a night shift
The normal hours of work should not exceed eight hours differential equivalent to at least 10% of his or her regular
a day. Unless there is a valid compressed work week wage for work done between these hours.
arrangement, an employee who renders work in excess
of eight hours a day is entitled to overtime pay equivalent
Rest Days
to the applicable wage rate plus at least 25% thereof. The An employer may require its employees to work six days
overtime rate will vary if the overtime work is rendered per week. Employees, except exempt employees, are
on a rest day, regular holiday or special day or during the entitled to a rest period without pay of not less than
period between 10 p.m. and 6 a.m. of the following day. 24 consecutive hours for every six consecutive normal
However, certain classes of employees (called exempt working days. For work done on rest days, the employer
employees in this publication) are not entitled to such should pay compensation equivalent to the applicable
overtime pay, namely: wage rate plus at least 30% thereof. The rate for work on
a rest day will vary if the rest day is also a regular holiday
A. government employees;
or a special day or the work is during the period between
B. managerial employees2 and officers or members of 10 p.m. and 6 a.m. of the following day.
the managerial staff3;
Moreover, employers may not require employees to
C. field personnel4; work during their scheduled rest day except in certain
cases and provided appropriate compensation is paid.
D. members of the family of the employer who are
In practice, they ask employees to sign employment
dependent on him for support;
contracts where the employees agree to perform work
E. domestic helpers and persons in the personal outside their normal work schedule.
service of another; and

2 Employees who meet the following conditions may be considered as managerial • They customarily and regularly exercise discretion and independent judgment;
employees:
• They (a) regularly and directly assist a proprietor or a managerial employee
• Their primary duty consists of the management of the establishment where they whose primary duty consists of the management of the establishment where
are employed or of a department or subdivision of the establishment; the managerial employee is employed or a subdivision of the establishment;
(b) execute under general supervision work along specialized or technical lines
• They customarily and regularly direct the work of two or more employees in such requiring special training, experience, or knowledge; or (c) execute under general
establishment; and supervision special assignments and tasks; and,
• They have the authority to hire or fire other employees of lower rank; or their • They do not devote more than 20% of their working hours to activities that are
suggestions and recommendations as to the hiring and firing and as to the not directly and closely related to the performance of the work described in the
promotion or any other change of status of other employees are given particular immediately preceding three bullets.
weight.
4 Field personnel refer to non-agricultural workers who regularly perform
3 Employees who meet the following conditions may be considered as officers or their duties away from the principal place of business or branch office of their
members of the managerial staff: employers and whose actual hours of work in the field cannot be determined with
reasonable certainty.
• Their primary duty consists of the performance of work directly related to
management policies of their employer;

DOING BUSINESS IN THE PHILIPPINES 39


Regular Holidays however, merits compensation equivalent to the
applicable wage rate plus at least 30% thereof. If the
There are 12 regular holidays, namely: special day also happens to be the non-exempt employee’s
• New Year’s Day (1 January), scheduled rest day, the premium rate is increased to at
least 50% of the applicable wage rate. The rate for work
• Maundy Thursday (movable date), on a special holiday will vary if the special holiday work is
rendered during the period between 12 midnight and 6
• Good Friday (movable date),
a.m. and 10 p.m. and 12 midnight of the special holiday.
• Eidul Fitr (movable date),
Service Incentive Leave
• Eidul Adha (movable date),
Except for exempt employees, every employee who has
• Araw ng Kagitingan (Monday nearest 9 April), rendered at least one year of service is entitled to a yearly
• Labor Day (Monday nearest 1 May), service incentive leave (which is commonly replaced by
vacation leave) of five days with pay. The service incentive
• Independence Day (Monday nearest 12 June), leave should be converted to its money equivalent and
• National Heroes Day (Last Monday of August), paid to the non-exempt employee by the employer if not
used or exhausted by the said employee at the end of
• Bonifacio Day (Monday nearest 30 November), the year. As a general rule, an employer can regulate the
• Christmas Day (25 December), and schedule of the service incentive leave of its employees.

• Rizal Day (Monday nearest 30 December). Meal Period


Except exempt employees and employees of retail and An employer must give its non-exempt employees at least
service establishments regularly employing fewer than one hour non-compensable time-off for regular meals.
10 workers, employees are entitled to be paid their However, an employer is allowed to give employees a
regular daily wage for any unworked regular holiday. meal break of less than one hour in certain cases. In any of
When an employer asks a non-exempt employee to work these cases, the shorter meal period must be considered
during a regular holiday, the employee should receive as compensable hours worked and must not, in any case,
at least 200% of his applicable wage rate on the regular be less than 20 minutes.
holiday. The rate for work on a regular holiday will vary
if the regular holiday work is rendered during the period Lactation Period
between 12 midnight and 6 a.m. and 10 p.m. and 12
Nursing employees are entitled to paid break intervals
midnight of the regular holiday.
(i.e., lactation periods) in addition to the unpaid regular
one-hour meal period, to breastfeed or express milk.
There may be several lactation periods of short duration
during the work day; and, each lactation period should
include the time it takes a nursing employee to go to
and from the workplace lactation station. The employer
and nursing employee may agree on the duration and
frequency of the lactation periods, provided the total
length of all the lactation periods is not less than 40
minutes for every eight-hour working period.

Private Retirement Benefit


An employee is entitled to receive such retirement
benefits as he or she may have earned under existing
Special Holidays laws and any collective bargaining agreement and other
There are four special holidays, namely: agreements. However, an employee’s retirement benefits
under any collective bargaining and other agreements
• Benigno S. Aquino Jr. Day (Monday nearest 21 should not be less than those provided by the Labor Code.
August);
In the absence of any provision on optional retirement in
• All Saints Day (1 November); a collective bargaining agreement, employer’s retirement
• Feast of the Immaculate Conception of Mary (8 plan or any other agreement, an employee (except
December); and an underground mining employee) has the option to
retire and receive retirement pay upon reaching the
• the last day of the year (31 December). age of 60 years or more, provided he or she has served
The President may declare additional special holidays. at least five years with his or her employer. When the
employee (who is not an underground mining employee)
Employees who are not required to work on these special reaches the compulsory retirement age of 65 years, his
days are not, by law, entitled to compensation. Work or her employer may retire him or her and pay him or
performed on these days by non-exempt employees, her retirement pay. In the case of underground mining

40 DOING BUSINESS IN THE PHILIPPINES


employees, they may retire and receive retirement pay addition to paid leaves under other laws, extendible when
upon reaching 50 years of age and completing five years the necessity arises as specified in a protection order
of service to their employer, and their employer may issued by an appropriate authority. The availment of the
retire them and pay them retirement pay when they 10-day leave is at the option of the female employee, and
reach 60 years (which is the compulsory retirement age such leave shall cover the days that the employee has to
for underground mining worker). An eligible retiring attend to medical and legal concerns. Unused leaves are
employee is entitled to retirement pay equivalent to not cumulative and not convertible to cash.
at least his or her half-month salary for every year of
service, a fraction of at least six months of service being Leave due to Gynecological
considered as one whole year. Disorders
The term “half-month salary” for retirement pay purposes Women employees who have rendered continuous
generally includes the 15-day salary of the employee aggregate employment service of at least six months
based on his or her latest salary date, cash equivalent for the last 12 months are entitled to the special leave
of five days of service incentive leave, 1/12 of the 13th benefit of up to two months with full pay following
month pay due the employee, and all other benefits surgery caused by gynecological disorders.
that the employer and employee may agree upon to be
included in computing the retirement pay. 13th Month Pay
Maternity Leave All “rank-and-file” employees of employers covered by
the Revised Guidelines on the Implementation of the
A qualified pregnant woman is entitled to maternity 13th Month Pay Law are entitled to a bonus called “13th
leave of 60 days in case of normal delivery, abortion or month pay,” regardless of the amount of their monthly
miscarriage, or 78 days in case of caesarean delivery. basic salary, their designation or employment status, and
During such leave, the pregnant woman shall receive the method by which their salary is paid, provided they
daily maternity benefit equivalent to 100% of her have worked for at least one month during a calendar year.
average salary credit, computed based on the formula The 13th month pay of a rank-and-file employee should
of the Social Security System (SSS), for 60 or 78 days, as be equivalent to at least 1/12 of the total basic salary
the case may be. The maternity benefits shall be paid that the employee earned within a calendar year. The
only for the first four deliveries or miscarriages. The required 13th month pay should be paid not later than 24
employer is required to advance to the pregnant female December of each year. Nonetheless, an employer may
employee the full maternity benefit within 30 days from give its rank-and-file employees half of the required 13th
the filing of the maternity leave application. The SSS month pay before the opening of the regular school year
shall immediately reimburse the employer 100% of the in June and the other half on or before 24 December. The
amount of maternity benefits advanced to the employee frequency of payment of the 13th month pay may also
upon receipt of satisfactory proof of such payment and be the subject of an agreement between the employer
legality thereof. and the collective bargaining agent of its rank-and-file
employees.
Paternity Leave
All married male employees, regardless of employment Rule on Non-diminution of
status, are entitled to paternity leave. It applies to the first Employment Benefits
four deliveries of the employee’s lawful wife with whom
he is cohabiting. The leave shall be for seven days, with If an employer grants employee benefits that are not
full pay, consisting of his basic salary, provided that his required by law or are more than that required by law,
pay shall not be less than the mandated minimum wage. the benefit may become part of the terms and conditions
In the event the paternity leave benefit is not availed of, of employment and cannot be unilaterally withdrawn or
said leave is not convertible to cash. discontinued by the employer, despite the absence of a
legal or contractual requirement to grant the said benefit,
Parental Leave if the grant of the benefit has become an employer
practice or policy.
In addition to other leave privileges under existing
laws, a solo parent employee as defined in the law who The following criteria may be used to ascertain the
has rendered service of at least one year is entitled to existence of a binding and enforceable employer practice
parental leave of not more than seven working days every or policy under Philippine law:
year. A change in the status or circumstance of the parent a. The act of the employer has been done for a long
claiming the parental leave benefit, such that he or she is period or is consistently repeated.
no longer left alone with the responsibility of parenthood,
shall terminate his or her eligibility for this benefit. b. The act is done deliberately, knowingly and consistently.
c. The act is not a product of erroneous interpretation or
Leave due to Domestic Violence construction of a doubtful or difficult question of law.
An employee who is a victim under Republic Act No. 9262
(also known as Anti-Violence against Women and Their
Children) is entitled to paid leaves of up to 10 days in

DOING BUSINESS IN THE PHILIPPINES 41


Labor Relations Welfare Legislation
The right of employees to self-organization is embodied
in the 1987 Philippine Constitution. Furthermore, it is
the policy of the Philippines to promote the free and
responsible exercise of the right to self-organization.
Employees generally have the right to self-organization
and the right to form, join or assist labor unions for
purposes of collective bargaining. There are, however,
certain limitations to the right to form, join or assist
labor unions. Managerial employees and confidential
employees are not eligible to form, join or assist labor
unions. Supervisory employees are not eligible for
membership in the collective bargaining unit of rank-
and-file employees, but may join, assist or form separate
collective bargaining units and/or labor unions of their
own.
While the formation of labor unions is encouraged, the The employer and its employees are required to be
activities of labor unions are regulated. For example, members of the SSS, Employees’ Compensation (EC)
labor unions are not allowed to commit unfair labor program, Philippine Health Insurance Corporation
practices. Labor unions are prohibited from, among (PhilHealth) and Home Development Mutual Fund
other things: (i) restraining or coercing employees in the (HDMF). The SSS administers both the social security and
exercise of their right to self-organization; (ii) causing or EC programs for employees in the private sector.
attempting to cause an employer to discriminate against
The employer should register with the SSS, PhilHealth
an employee; and (iii) asking for or accepting negotiation
and HDMF and report its employees for coverage with
fees from the employer as part of the settlement of any
the said agencies. Furthermore, the employer and its
issue in collective bargaining.
employees should contribute to these agencies, with
A labor union has to be registered with the DOLE for it the contributions based on the monthly compensation
to enjoy all the rights granted by law to labor unions. of the employees. Each agency has its own definition
It may register as an independent labor union or as a of monthly compensation. The employer is responsible
charter of a federation or national union. Also, it has to for withholding and remitting the contributions of
be recognized or certified as the exclusive bargaining its employees, and remitting its (i.e., the employer’s)
representative of the employees of the bargaining unit counterpart contributions, within the period that each
for it to represent them in collective bargaining. The Labor agency has set. The employers’ contributions may not
Code and its implementing rules and regulations define be deducted from the employees’ salary. Failure to remit
the registration process and specify the recognition the contributions to the SSS, PhilHealth and HDMF could
or certification process and the manner of collective give rise not only to monetary liability for the employer
bargaining. but also to criminal sanctions against the employer and
its officers. If a juridical person is guilty of the offense, its
Employees, through their union representatives, managing director, partner, president, general manager
may negotiate and enter into collective bargaining and/or the responsible person are liable for the penalties.
agreements (CBAs) with their employers. The employees
negotiate the terms and conditions of their employment The monetary liability would involve interest on the
through CBAs. contributions that have not been remitted, computed
from the date the contributions fall due until they are
Employees, under specified circumstances, have remitted to the relevant agencies. On the other hand, the
the right to conduct a strike in accordance with law. criminal sanctions would involve a fine or imprisonment
Correspondingly, the employer, under specified or both.
circumstances, has the right to lock out employees.
Aside from labor unions, employees may form and join
workers’ associations and other mutual aid and benefit
associations for legitimate purposes, other than collective
bargaining.
The Labor Code also allows the formation of labor-
management councils in private companies to provide
a venue for labor and management representatives to
discuss company and personnel policies. The Labor Code
and its implementing rules and regulations specify the
organizational structure and procedures in forming such
councils.

42 DOING BUSINESS IN THE PHILIPPINES


Rights of Employer Types of Employment
Every employer has the right to regulate all aspects The Labor Code and jurisprudence classify employment
of employment according to its own discretion and status into regular, project, seasonal, casual, probationary
judgment. This includes the hiring of employees, work and fixed-term.
assignments, instructing working methods, the time,
The employment status of an employee is not determined
place and manner of work, work supervision, transfer of
by the specific designation given to it in the employment
employees, lay-off of workers, and discipline, dismissal,
contract but by the nature of the work being performed
and recall of employees. The only limitations to the
by the employee.
exercise of this management prerogative are those
imposed by labor laws and the requirements of good An employment is presumed to be regular or permanent
faith. in nature, unless the legal requirements for the other
types of employment are strictly observed. For instance,
With respect to the transfer of employees, the employer
a probationary employee must be provided with written
has the prerogative to move them around in order to
standards for regular employment no later than the start
ascertain where they will function with maximum benefit
of his or her employment. Otherwise, he or she shall be
to the company. While an employee enjoys the right to
deemed a regular employee from the start of his or her
security of tenure, this does not mean that he has such
employment.
a vested right in his or her position as would deprive the
company of its prerogative to change the employee’s The classification of an employee is important because
assignment or transfer him or her where he or she will be under Philippine law, the causes for terminating an
most useful to the company. However, the transfer should employer-employee relationship will depend upon the
not be unreasonable, nor inconvenient, nor prejudicial to classification of the employee.
the employee, and it should not involve a demotion in
rank or a diminution of his or her salaries, benefits, and Regular and Probationary
other privileges.
Employment
The termination of employees will be discussed in further
If an individual is engaged to perform activities that are
detail below.
usually necessary or desirable in the usual business or
trade of the employer, he or she should be employed as
Contract of Employment a regular employee (i.e., an employee with an indefinite
term) unless the employment relationship can qualify as
Although not generally required, it is best to put the an alternative employment arrangement.
employment contract between the employer and the In this connection, before an employee becomes a regular
employee in writing. This will protect the employer in employee, his or her employer can require him or her to
the event of a future disagreement as to the terms and undergo probationary period. The maximum length of
conditions of employment. the probationary period is six months, counted from the
It is also advisable for the employer to have an employment date the new employee started working. The employer
handbook containing the rules and regulations that will normally may not extend the probationary period. Once
govern the relationship with the employee/s. the new employee is allowed to work after the lapse of
the probationary period, his or her employment will be
deemed a regular employment by operation of law. Also,
at or before the beginning of the probationary period,
the employer must notify the employee of the standards
that he or she must satisfy. Otherwise, the employment
will also be deemed a regular employment from the time
the employee started working.

Project and Seasonal


Employment
There is project employment when the period of
employment has been fixed for a specific undertaking,
the completion of which has been determined at the time
of the engagement of the employee. A project employee
may acquire the status of a regular employee when he or
she is continuously rehired after the cessation of a project
and the tasks he or she performs are vital, necessary and
indispensable to the usual business or trade of his or her
employer.

DOING BUSINESS IN THE PHILIPPINES 43


In contrast, there is seasonal employment when the work
is to be performed only at a certain time of the year and
the employment is for the duration of that time of the
year.

Casual Employment
There is casual employment when an employee is
engaged to perform work that is merely incidental to the
business of the employer, and such work is for a definite
period made known to the employee at the time of his or
her engagement. If the casual employee renders at least
one year of service, whether such service is continuous or
not, he or she shall be considered a regular employee with
respect to the activity for which he or she is employed and
his or her employment shall continue while such activity
exists.

Fixed-Period Employment
There is fixed-period employment when the
commencement and termination dates of the
employment relationship have been set before
the employment relationship begins. Fixed-period
employment is highly restricted and is subject to the
following criteria: (i) the fixed period of employment
was knowingly and voluntarily agreed upon by the
parties without any force, duress, or improper pressure
being brought to bear upon the employee and absent
any other circumstances vitiating his or her consent; or
(ii) it satisfactorily appears that the employer and the
employee dealt with each other on more or less equal
terms with no dominance exercised by the former over
the latter. As much as possible, fixed-period employment
should involve highly educated people or highly technical
positions.

Termination of Employment
Corollary to the employer’s right to hire, terminate and Cause for dismissal
discipline employees is an employee’s right to security of
tenure. An employer may terminate an employment for any of
the just and authorized causes defined in the Labor Code.
In general, an employer may terminate an employment The just causes for termination of employment are as
only if there is a legal (i.e., just or authorized) cause for follows:
termination and it has followed the procedures required
for the cause of termination. At-will employment, where • Serious misconduct or willful disobedience by the
the employer may dismiss an employee at any time, employee of the lawful orders of his or her employer
without cause and by mere notice or salary in lieu of or representative in connection with his or her work;
notice, is not allowed under Philippine labor law. • Gross and habitual neglect by the employee of his or
On the other hand, an employee may terminate his or her her duties;
employment for any reason by serving a written notice • Fraud or willful breach by the employee of the trust
to his or her employer at least one month in advance. In reposed in him or her by his or her employer or duly
the event that the employee does not give any notice, authorized representative;
the employer may hold the employee liable for damages.
Under certain instances, the employee may terminate his • Commission of a crime or offense by the employee
or her employment without need of any notice. against the person of his or her employer or any
immediate member of his or her family or his or her
duly authorized representative; and
• Other causes analogous to the foregoing.

44 DOING BUSINESS IN THE PHILIPPINES


On the other hand, the authorized causes for termination
of employment are as follows:
• Installation of labor-saving devices;
• Redundancy;
• Retrenchment to prevent losses;
• Closing or cessation of operation of the establishment
or undertaking; and
• Disease, where the continued employment of
the afflicted employee is prohibited by law or is
prejudicial to his health as well as to the health of his
co-employees.
Termination of employment by the employer without a
legal cause will entitle the illegally dismissed employee
to reinstatement without loss of seniority rights and
other privileges, to payment of full back wages and of
other benefits or their monetary equivalent computed
from the time compensation was withheld until actual
reinstatement, and to payment of damages.

Procedures for dismissal


In dismissing an employee from work due to a just cause,
the Labor Code requires the employer to serve a written
notice to the employee informing him or her of the
charges against him or her. After serving the notice, the
employer must afford the employee an opportunity to be
heard where the employee can answer the charges with
the assistance of counsel, if he or she so desires. If the
employer decides to dismiss the employee, it must serve
another written notice to the employee to inform him or
her of its decision to dismiss him or her.
In case of termination of employment due to an authorized
cause, the employer must serve a written notice to each
affected employee and to the DOLE at least one month
before the intended effective date of the termination.
For employment termination by reason of disease, there
must also be a certification by a competent public health
authority that the disease cannot be cured within a period
of six months even with proper medical treatment. In
all cases of authorized cause employment termination,
the employee is entitled to receive separation pay. The
separation pay is equivalent to half-month’s salary for
every year of service or one-month’s salary for every
year of service depending on the authorized cause of
employment termination.
If an employee is dismissed without his employer
observing the appropriate procedures, he or she is
entitled to nominal damages, the amount of which is
subject to the discretion of the court, even if there is a
just or authorized cause for employment termination.
For this purpose, the court will take into consideration
the relevant circumstances of each case, particularly the
gravity of the due process violation. The nominal damage
serves as a penalty upon the employer for its failure to
comply with the requirements of procedural due process
for employment termination.
10
IMMIGRATION
Entry to the Philippines
A foreign national, who is not a “restricted” national5,
may enter the Philippines without obtaining an entry
(9[a]) business visa from the Philippine Embassy from the
country of origin. However, the said unrestricted foreign
national must, upon entry: (a) have a passport valid for
not less than six months; and (b) hold a valid return ticket.
Upon arrival in the Philippines, the foreign national will
be granted a 9(a) visa valid for 30-, 21-, 14-, or 7-days,
depending on his or her nationality.
If the foreigner is a “restricted” national, he or she must, in
addition to the passport and return ticket requirements,
obtain from the Philippine Embassy or Consulate in his
country of origin or residence a 9(a) visa before entering
the country.
Nationals of countries that are part of the EU are not
considered “restricted” nationals.

Work/Employment Requirements
All foreign nationals who intend to work in the Philippines The issuance of an AEP is subject to the non-availability
are required to obtain proper work visas and/or permits, of a person in the Philippines who is competent, able
through a local petitioner or sponsor. The local petitioner and willing to perform the services for which the foreign
or sponsor may be a domestic corporation (incorporated national is desired. In general, the AEP application must
in the Philippines) or a foreign corporation registered first be filed with the DOLE on behalf of the foreign
and licensed to do business in the Philippines. The work national.
visa and/or permit applications are usually filed upon the
It takes around two to three weeks from submission of
arrival of the foreign national in the Philippines.
the complete documentary requirements to process the
Entities engaged in nationalized or partly-nationalized AEP application. The validity period of the AEP usually
industries (industries where foreign ownership / control coincides with the duration of the foreign national’s
is limited) can only employ foreign nationals as technical assignment in the Philippines.
personnel and subject to issuance by the Department of
There are certain instances when a foreign national is
Justice (DOJ) of an Authority to Employ. The issuance
exempt/excluded from securing an AEP, some examples
of an Authority to Employ is required before a foreign
of which are when the foreign national is: (a) a corporate
national can work for a partly-nationalized entity.
officer under the Corporation Code of the Philippines,
Short-Term Assignments (3-6 months) Articles of Incorporation and By-Laws of the Corporation
such as President, Secretary and Treasurer; (b) an intra-
A foreign national who: (a) intends to work in the corporate transferee who is a manager, executive or
Philippines for a short period not exceeding six months; specialist who is an employee of the foreign service
and (b) will occupy a temporary position, is required by supplier for at least one (1) year prior to deployment to
the Bureau of Immigration (BI) to obtain a special work a branch/subsidiary/affiliate or representative office in
permit (SWP). The SWP is a special permit issued for an the Philippines; and (c) a consultant who does not have an
initial period of three months and may be extended only employer in the Philippines.
once for another three months. The SWP must be filed
by a local petitioner or sponsor on behalf of the foreign The AEP application, once accepted for filing by the DOLE,
national, upon the latter’s arrival in the Philippines. does not allow a foreign national to work immediately. A
Provisional Work Permit will have to be applied for and
Long-Term Expatriates, and/or Local issued before the foreign national can commence work
with the Philippine employer during the pendency of the
Transfer work visa and AEP applications.
Alien Employment Permit (AEP)
A foreign national who intends to work in the Philippines 5 The Department of Foreign Affairs (DFA) Advisory enumerates the countries
beyond six months is required to obtain an AEP and a whose nationals are not required to obtain an entry or 9(a) visa from the Philippine
Embassy/Consulate abroad before entering the country. These nationals are
work visa from the relevant government agencies. called “unrestricted” nationals. Nationals of countries not appearing in the DFA
Advisory are called “restricted” nationals and are required to obtain a 9(a) visa
from the relevant Philippine Embassy/Consulate prior to entering the Philippines.
For further information, please visit the DFA’s website at www.dfa.gov.ph.

DOING BUSINESS IN THE PHILIPPINES 47


Work VISAS
The most common types of work visas that may be The 47(a)(2) visa is generally valid for an initial period of
obtained are the following: one year and is renewable from year to year.
Pre-arranged employment or 9(g) visa It takes approximately five to six weeks from submission
of the complete documentary requirements to process a
This visa is available to a foreign national who is proceeding
47(a)(2) visa application.
to the Philippines to engage in a lawful occupation or
gainful employment in a Philippine entity. The 9(g) visa Special types of work visas are the following:
may be extended to the foreign national’s spouse and
OBU or PD1034 visa
unmarried minor children under 21 years of age.
This visa is granted under Section 7 of Presidential Decree
The 9(g) visa is granted for a period co-terminous with the
No. 1034, which allows foreign personnel to be assigned
AEP, which is in turn granted for a period discretionary
by any foreign bank to work in its OBU in the Philippines.
to the DOLE, usually based on the duration of the
Such foreign personnel, their spouses and unmarried
assignment of the foreigner. However, the officers of the
children under 21 years of age shall be granted a multiple
BI have the discretion to shorten the validity period of the
entry special visa, valid for a period of one year.
approved pre-arranged employment visa to one year.
Regional or Area Headquarters, Regional Operating
It takes approximately two to three months from
Headquarters, and Regional Warehouse or RA8756 Visa
submission of the complete documentary requirements
to process a 9(g) visa application. This visa is granted under Section 5, Art. 60 of Republic Act
No. 8756, which allows foreign personnel of regional or
Treaty Trader’s/Investor or 9(d) visa
area headquarters and regional operating headquarters
A foreigner is entitled to a treaty trader or investor visa of multinational companies, their respective spouses
only if he or she is a national of the US, Germany or Japan, and unmarried children under 21 years of age, if
countries with which the Philippines has concluded a accompanying them or if following to join them after
reciprocal agreement for the admission of treaty traders their admission into the Philippines as non-immigrants, to
or investors. The local petitioning company must be be issued a multiple-entry special visa, which shall be valid
majority-owned by US, German or Japanese interests. for a period of three years. Please note, however, that the
The nationality of the foreigner and the majority of the validity period of the visa may be shorter, depending on
shareholders of the employer company must be the same. the contract of the foreign personnel.
When granted, the visa may be extended to the foreigner’s Subic Free Port Zone Work Visa
spouse and unmarried children below 21 years of age.
A foreign national who possesses executive or highly
The treaty trader’s/investor’s visa is granted for a period technical skills, which no Filipino citizen within the SFZ
co-terminous with the AEP, which is in turn granted for possesses, as certified by the DOLE, may apply for this
a period discretionary to the DOLE, usually based on the visa with the SBMA.
duration of the assignment of the foreigner. However,
Clark Special Economic Zone Work Visa
the officers of the BI have the discretion to shorten the
validity period of the approved 9(d) visa to one year. Foreign nationals who possess executive or highly
technical skills, which no Filipino citizen within the CSEZ
It takes approximately two to three months from
possesses, may apply for this type of work visa with the
submission of the complete documentary requirements
Clark Development Authority.
to process a 9(d) visa application.
Special non-immigrant (47[a][2]) visa
This visa is granted under Section 47(a)(2) of the Philippine
Immigration Act, which allows the President to issue such
visas when public interest warrants, subject to conditions
the President may prescribe.
The President, acting through the appropriate
government agencies, has exercised this authority to
allow foreign nationals to be employed in supervisory,
technical or advisory positions in Export Processing Zone
Enterprises, BOI-registered enterprises, and Special
Government Projects (e.g., MRT, Skyway).
The 47(a)(2) visa may be extended to the foreign
national’s spouse and unmarried minor children under 21
years of age.

48 DOING BUSINESS IN THE PHILIPPINES


Special Resident Visas Others
A foreigner may apply for special resident visas. These There are other types of visas that are available to foreign
visas allow a foreigner to work in the Philippines, subject nationals depending on the following factors: (i) nature
to other requirements or limitations imposed by law. of the business, registration and corporate structure of
the Philippine company; (ii) nature of the work that the
The following are the different types of special resident
foreign nationals will perform while in the Philippines; (iii)
visas:
nationality of the majority stockholder of the corporation;
Special Resident Retiree’s Visa (SRRV) (iv) nationality (original and/or acquired), as well as
nationality of the spouses, if any, of the foreign nationals;
The SRRV program is available to foreigners and former and (iv) other related information.
Filipinos at least 35 years of age, who deposit the
minimum amount required by law with a bank accredited
by the Philippine Retirement Authority (PRA).
The holder of an SRRV may stay in the Philippines
indefinitely or visit the country at any time.
The holder may also invest in any of the areas specifically
designated by the PRA.
Special Investor’s Resident Visa (SIRV)
The SIRV is a program offered by the Philippine
government to alien investors wanting to obtain a special
resident status with multiple entries for as long as the
required investment subsists.
The applicant’s spouse and unmarried children under 21
years of age, who are accompanying the applicant, may
be included in the visa application.
SIRV for Investors in Tourist-Related Projects and
Tourist Establishments
A foreigner who invests an amount of at least USD50,000
in a qualified tourist-related project or tourism
establishment, as determined by a governmental
committee, shall be entitled to an SIRV.
Subic Free Port Zone Residency Visas for Retirees
This visa requires the applicant to be over 60 years old,
of good moral character, with no previous conviction of
a crime involving moral turpitude, no longer employed
or not self-employed, and receiving a pension or passive
income, exceeding USD50,000 per year.
Quota Visa
A Quota Visa is issued on “quota basis” (i.e., not more than
50 in a calendar year) to foreign nationals of countries
that have reciprocity agreements with the Philippines.
The following EU member countries have reciprocity
agreements with the Philippines: Austria, Belgium, Czech
Republic, Denmark, Estonia, Finland, France, Germany,
Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg,
Malta, Netherlands, Slovak Republic, Slovenia, Spain,
Sweden, and United Kingdom.

DOING BUSINESS IN THE PHILIPPINES 49


11
INTELLECTUAL
PROPERTY

The Philippines is a member of the Paris


Convention for the Protection of Industrial
Property, the Berne Convention for the Protection
of Literary and Artistic Works, the Protocol
Relating to the Madrid Agreement Concerning
the International Registration of Marks (Madrid
Protocol), and the World Trade Organization and,
by such membership, adheres to the Agreement
on Trade Related Aspects of Intellectual Property
Rights (TRIPS).
Intellectual property rights are primarily
protected and enforced in the Philippines
through the Intellectual Property Code (IP
Code), and the rules of the Intellectual Property
Office (IPO) and the Bureau of Customs (BOC).
Remedies in connection with enforcement of
intellectual property rights, such as injunctive
relief and damages, may also be secured by the
holder of the intellectual property right from the
civil courts.
INTELLECTUAL PROPERTY OFFICE
The IPO processes applications for trademarks, service Inventions, utility models and industrial designs may be
marks, trade names, patents, utility models, industrial patented. A patent is granted to the inventor who filed
designs, and copyrighted works, and issues the his or her patent application earlier than others, thus
corresponding certificates of registration. Copyrighted simplifying the determination of who is entitled to own
works are deposited with the National Library or the the patent.
Intellectual Property Office (IPO),as well as the Supreme
A patent registration for an invention is valid for twenty
Court Library for copyrighted works in the field of law.
(20) years from the filing date of the application, subject
Trademarks, service marks, and trade names owned to the payment of an annual fee starting from the
by persons, corporations, partnerships, or associations expiration of four (4) years from the date of publication
domiciled in the Philippines or in any foreign country may of the application. A registration for a utility model is valid
be registered with the IPO. Trade names are protected for seven (7) years from the filing date of the application
even before or without registration. and automatically expires at the end of the period. The
term of registration of an industrial design is five (5)
Rights to a mark are acquired by registration. Priority is
years from the filing date and may be renewed for two
given to whoever applies first for registration. There is
consecutive periods of five (5) years each.
a single procedure for both foreign and local applicants
for the registration of marks. An applicant should file a Literary, scholarly, scientific, and artistic works, whether
declaration of use within three (3) years from the date of published or unpublished, may be copyrighted. Copyright
application. protection extends to computer programs, multimedia
works, and databases that are original by reason of the
Trademark registration is valid for ten (10) years, for as
selection, coordination or arrangement of their contents.
long as the registrant files with the IPO a declaration
of use/justifiable non-use within one (1) year following In general, copyrights endure for the lifetime of the
the 5th anniversary of the registration or renewal date. creator and for fifty (50) years after his or her death.
The registration is renewable at the end of each 10-year
period from the registration or renewal date so long
as the mark is still in commercial use. Starting 1 August
2017, a declaration of actual use should also be filed with
the IPO within one (1) year from the renewal date in order
to maintain the trademark registration.

Border Control
The BOC rules on border control measures prevent the The Strategic Trade and Management Act also provides
entry into the Philippines of infringing merchandise a mechanism for trade control in the importation,
and ensure expedited procedures for the handling exportation, re-exportation, reassignment, transit, and
and disposition of goods suspected to be imported in transshipment of strategic goods and the provision of
violation of the IP Code. related services.
Intellectual Property (IP) owners may record their Strategic goods are goods enumerated in the National
products covered by patents, trademarks, copyrights and Strategic Goods List, which has yet to be issued by the
other similarly protected IP rights with the BOC. National Security Council - Strategic Trade Management
Committee. These are products that, for security reasons
The application for recordal serves as the consent of the
or due to international agreements, are considered to
IP owner for the BOC to conduct a physical inspection of
be of such military importance that their export is either
imports suspected to be infringing. The application for
prohibited altogether or subject to specific conditions.
recordal also serves as a continuing complaint on the part
Such goods are generally suitable to be used for military
of the IP owner for importers of infringing products or
purposes or for the production of weapons of mass
material.
destruction.
The recordal will be the basis of the BOC for monitoring
Related services refer to brokering, financing, and
suspected imports to determine whether they are liable
transporting in relation to the movement of strategic
to seizure, forfeiture and subsequent destruction. A
goods between two foreign countries and providing
BOC recordal is valid for two (2) years from the date of
technical assistance.
recordal.

DOING BUSINESS IN THE PHILIPPINES 51


Technology Transfer Considerations for Members of
Arrangements the EU
A technology transfer arrangement (TTA) is a contract The EU and the Philippines are both signatories to the
or an agreement involving the transfer of systematic Paris Convention for the Protection of Industrial Property,
knowledge for the manufacture of a product, the the Berne Convention for the Protection of Literary and
application of a process, or the rendering of a service, Artistic Works, the Madrid Protocol, and the TRIPS. The
including management contracts. It also refers to an Philippines therefore grant nationals of Member States
agreement to transfer, assign, or license all forms of of the EU rights and remedies with regard to intellectual
intellectual property rights, including the licensing property rights similar to those afforded to Philippine
of computer software, except computer software nationals.
developed for the mass market.
TTAs should not contain certain prohibited clauses
which are deemed to be adverse to competition and
trade, and should contain certain mandatory provisions.
Non-conformity to the requirement on prohibited and
mandatory clauses will automatically render the TTA
unenforceable. However, there are exceptional cases
where exemptions from the prohibited and/or mandatory
clauses may be allowed by the IPO on a case by case basis,
upon showing that substantial benefits will accrue to the
Philippine economy as a result of the implementation of
the TTA.
TTA should not contain certain prohibited clauses
which are deemed to be adverse to competition and
trade, and should contain certain mandatory provisions.
Non-conformity to the requirement on prohibited and
mandatory clauses will automatically render the TTA
unenforceable. However, there are exceptional cases
where exemptions from the prohibited and/or mandatory
clauses may be allowed by the IPO on a case by case basis,
upon showing that substantial benefits will accrue to the
Philippine economy as a result of the implementation of
the TTA.
12
COMPETITION
LAW
Overview
The Philippine Competition Act (PCA), which took effect
on 8 August 2015, provides for the following, among
others:
A. the creation of the Philippine Competition
Commission (PCC), as an independent quasi-judicial
body classified as an attached agency to the Office
of the President and as the primary Government
agency tasked with the implementation of the PCA;
B. the regulation of certain commercial activities
associated with free and fair competition in the
Philippines, such as anti-competitive agreements,
abuse of market dominance, and anti-competitive
mergers and acquisitions (M&A); and
C. the establishment of a regulatory framework for
the investigation, review and approval, adjudication,
enforcement and sanctioning of commercial
activities relating to free and fair competition in the
Philippines.
The PCA represents the country’s long-awaited
comprehensive legal framework on antitrust. Passed as
part of a concerted effort to prepare the country for the
ASEAN integration, the PCA brings the Philippines closer
to the level of antitrust regulation in other countries.

Prohibited Agreements and Conduct


The PCA prohibits anti-competitive agreements, abuse of Abuse of Dominant Position
a dominant position in the market, and anti-competitive
M&A. The PCA also prohibits an entity from abusing its dominant
position by engaging in conduct that would substantially
Anti-Competitive Agreements prevent, restrict or lessen competition.

The PCA prohibits the following anti-competitive Under the PCA, such conduct would include the following
agreements: actions of a dominant entity:

1. as illegal per se, agreements among competitors (i) 1. selling goods or services below cost with the object of
restricting competition on price, its components or other driving competition out of the relevant market;
terms of trade, and (ii) various forms of bid rigging; The PCC will consider whether the entity or entities did
2. agreements among competitors, which have the not have such object, and the price established was in
object or effect of substantially preventing, restricting good faith to meet or compete with the lower price of
or limiting competition in the relevant market, in respect a competitor in the same market selling the same or
of (i) setting, limiting, or controlling production, markets, comparable product or service of like quality.
technical development, or investment, and (ii) dividing 2. imposing barriers to entry or committing acts that
or sharing the market, whether by volume of sales or prevent competitors from growing within the market in
purchases, territory, type of goods or services, buyers or an anti-competitive manner, except those that develop in
sellers, or any other means; and the market as a result of or arising from a superior product
3. agreements other than (1) and (2) above that have the or process, business acumen, or legal rights or laws;
object or effect of substantially preventing, restricting 3. tying, or making a transaction subject to acceptance
or lessening competition in the relevant market in the by the other parties of other obligations which, by
Philippines, provided that those agreements, which their nature or according to commercial usage, have no
contribute to improving the production or distribution of connection with the transaction;
goods and services or to promoting technical or economic
progress, while allowing consumers a fair share of the 4. setting prices or other terms or conditions that
resulting benefits, may not necessarily be prohibited discriminate unreasonably between customers or sellers
under the PCA. of the same goods or services, where the effect may be
to lessen competition substantially;

54 DOING BUSINESS IN THE PHILIPPINES


However, the following are considered permissible price While the PCA prohibits the above actions that constitute
differentials: abuse of dominance, it does not prohibit a person from
having a dominant position in a relevant market or on
• socialized pricing for the less fortunate sector of the
acquiring, maintaining and increasing market share
economy;
through legitimate means that do not substantially
• price differential which reasonably or approximately prevent, restrict or lessen competition. Further, any
reflect differences in the cost of manufacture, conduct which contributes to improving production or
sale, or delivery resulting from differing methods, distribution of goods or services within the relevant
technical conditions, or quantities in which the goods market, or promoting technical and economic progress
or services are sold or delivered to the buyers or while allowing consumers a fair share of the resulting
sellers; benefit may not necessarily be considered an abuse of
dominant position.
• price differential or terms of sale offered in response
to the competitive price of payments, services or
changes in the facilities furnished by a competitor;
and
Under the PCA, there is a rebuttable
• price changes in response to changing market presumption of dominance when an entity has
conditions, marketability of goods or services, or a market share of at least 50% of the relevant
volume.
market. An entity may also be considered
5. imposing restrictions on the lease or sale or trade of dominant despite a lower market share,
goods or services, such as where, to whom, or in what according to the following factors under the
forms goods or services may be sold or traded, fixing
prices, giving preferential discounts or rebate upon such
PCA:
price, or imposing conditions not to deal with competing A. The share of the entity in the relevant
entities, where the object or effect of the restrictions is to
market and whether it is able to fix prices
prevent, restrict or lessen competition substantially;
unilaterally or to restrict supply in the
Nonetheless, the following are not prohibited under the relevant market;
PCA:
B. The existence of barriers to entry and the
• permissible franchising, licensing, exclusive
merchandising or exclusive distributorship
elements which could foreseeably alter
agreements such as those which give each party the both said barriers and the supply from
right to unilaterally terminate the agreement; or competitors;
• agreements protecting intellectual property rights, C. The existence and power of its competitors;
confidential information, or trade secrets.
D. The possibility of access by its competitors
6. making supply of particular goods or services
or other entities to its sources of inputs;
dependent upon the purchase of other goods or services
from the supplier which have no direct connection with E. The power of its customers to switch to
the main goods or services to be supplied; other goods or services;
7. imposing unfairly low purchase prices for the goods
or services of, among others, marginalized agricultural
F. Its recent conducts; and
producers, fisher-folk, micro-, small-, medium-scale G. Other criteria established by the
enterprises, and other marginalized service providers and
regulations of the Competition Act.
producers;
8. imposing unfair purchase or selling price on their
competitors, customers, suppliers or consumers, provided
that prices that develop in the market as a result of or
due to a superior product or process, business acumen or
legal rights or laws shall not be considered unfair prices;
and
9. limiting production, markets or technical development
to the prejudice of consumers.
However, limitations that develop in the market as a
result of or due to a superior product or process, business
acumen or legal rights or laws are not considered violative
of the PCA.

DOING BUSINESS IN THE PHILIPPINES 55


Merger Control
The PCC has been given the power to review proposed A. with respect to a proposed acquisition of assets in the
M&A based on such guidelines as the Commission may Philippines, if either:
set, and, where any such M&A will substantially prevent,
• the aggregate value of the assets in the Philippines
restrict or lessen competition in the relevant market, to
being acquired in the proposed transaction exceeds
prohibit such M&A.
PHP1.0 billion; or
An “acquisition” within the contemplation of the law
• the gross revenues generated in the Philippines by
refers to the purchase or transfer of securities or assets,
assets acquired in the Philippines exceed PHP1.0
through contract or other means, for the purpose of
billion;
obtaining control by: (a) one entity of the whole or part
of another; (b) two or more entities over another; or, (c) B. with respect to an acquisition of assets outside the
one or more entities over one or more entities. “Control”, Philippines, if:
on the other hand, is statutorily defined as the “ability to
substantially influence or direct the actions or decisions • the aggregate value of the assets in the Philippines
of an entity, whether by contract, agency or otherwise.” of the acquiring entity exceeds PHP1.0 billion; and

In determining the existence of “control” by one entity • the gross revenues generated in or into the
over another, the PCC may consider the following: Philippines by those assets acquired outside the
Philippines exceed PHP1.0 billion.
1. Control shall be presumed to exist when the parent
owns directly or indirectly, through subsidiaries, more C. with respect to a proposed acquisition of assets inside
than one-half of the voting power of an entity, unless in and outside the Philippines, if:
exceptional circumstances, it can clearly be demonstrated • the aggregate value of the assets in the Philippines
that such ownership does not constitute control. of the acquiring entity exceeds PHP1.0 billion; and
2. Control also exists even when an entity owns one-half • the aggregate gross revenues generated in or into
or less of the voting power of another entity when: the Philippines by assets acquired in the Philippines
• there is power over more than one-half of the voting and any assets acquired outside the Philippines
rights by virtue of an agreement with investors; collectively exceed PHP1.0 billion.

• there is power to direct or govern the financial and D. with respect to a proposed acquisition of (1) voting
operating policies of the entity under a statute or shares of a corporation or of (2) an interest in a non-
agreement; corporate entity:

• there is power to appoint or remove the majority of • i. if the aggregate value of the assets in the Philippines
the members of the board of directors or equivalent that are owned by the corporation or non-corporate
governing body; entity or by entities it controls, other than assets
that are shares of any of those corporations, exceed
• there is power to cast the majority votes at meetings PHP1.0 billion; or
of the board of directors or equivalent governing
body; • ii. the gross revenues from sales in, into, or from
the Philippines of the corporation or non-corporate
• there exists ownership over or the right to use all or a entity or by entities it controls, other than assets
significant part of the assets of the entity; or that are shares of any of those corporations, exceed
PHP1.0 billion; and
• there exist rights or contracts which confer decisive
influence on the decisions of the entity. If:
Under the PCA, parties to a M&A are required to notify (A) as a result of the proposed acquisition of the
the PCC and obtain clearance of such transaction where: voting shares of a corporation, the entity or entities
acquiring the shares, together with their affiliates,
1. the aggregate annual gross revenues in, into or would own voting shares of the corporation that,
from the Philippines, or the value of the assets in the in the aggregate, carry more than the following
Philippines of the ultimate parent entity of at least one percentages of the votes attached to all the
of the acquiring or acquired entities, including that of all corporation’s outstanding voting shares:
entities that the ultimate parent entity controls, directly
or indirectly, exceeds PHP1.0 billion; and (a) 35%, or
2. the value of the transaction exceeds PHP1.0 billion, as (b) 50%, if the entity or entities already own more
may be determined below: than 35% before the proposed acquisition; or
(B) as a result of the proposed acquisition of an
interest in a non-corporate entity, the entity or
entities acquiring the interest, together with their

56 DOING BUSINESS IN THE PHILIPPINES


affiliates, would hold an aggregate interest in the non- and detailed analysis of the transaction (Phase II review).
corporate entity that entitles the entity or entities to A Phase II review shall take an additional 60 days, subject
receive more than the following percentages of the to circumstances that may suspend the running of the 60-
profits of the non-corporate entity or assets of that day period, as provided in the Merger Procedure.
non-corporate entity on its dissolution:
Within the review period, the PCC may approve the
(a) 35%, or proposed transaction, absolutely prohibit the same,
require certain changes to the agreement or for the
(b) 50%, if the entity or entities already own more
parties to enter into agreements specified by the PCC,
than 35% before the proposed acquisition; or
based on its assessment of whether the transaction will
substantially prevent, restrict or lessen competition in the
3. Where an entity has already exceeded the 35% relevant market in the Philippines.
threshold for an acquisition of voting shares, or the The parties must not consummate the proposed
35% threshold for an acquisition of an interest in a non- transaction, in whole or in part, unless they obtain the
corporate entity, another notification will be required PCC’s approval, or in case the periods for review for Phase
if the same entity will exceed the 50% threshold after 1 or Phase II lapse without the PCC issuing any decision.
making a further acquisition of either voting shares or an
interest in a non-corporate entity. A merger or acquisition agreement consummated
in violation of the notification requirement shall
4. An acquisition consisting of successive transactions, be considered void and subject the parties to an
or acquisition of parts of one or more entities, which administrative fine of 1% to 5% of the value of the
shall take place within a one-year period between the transaction, as determined under applicable regulations.
same parties, or any entity they control or are controlled
by or are under common control with another entity or
entities, shall be treated as one transaction. If a binding
preliminary agreement provides for such successive
transactions or acquisition of parts, the entities shall
provide notification on the basis of such preliminary
agreement. If there is no binding preliminary agreement,
notification shall be made when the parties execute the
agreement relating to the last transaction which, when
taken together with the preceding transactions, satisfied
the prescribed thresholds.
For purposes of calculating notification thresholds, the
implementing rules of the Competition Act provide as
follows:
1. The aggregate value of assets in the Philippines shall
be as stated on the last regularly prepared balance
sheet or the most recent audited financial statements
in which those assets are accounted for.
2. The gross revenues from sales of an entity shall be the
amount stated on the last regularly prepared annual
statement of income and expense of that entity.
Procedure for Pre-Notification Consultations,
Notification, and Review
Based on the PCC Rules on Merger Procedure (Merger
Procedure), which took effect on 8 December 2017,
parties to a M&A that meets the threshold requirements
are required to notify the PCC within 30 days from
signing of definitive agreements relating to the proposed
transaction.
The PCC’s review covers various stages and periods,
beginning with a review of the completeness and
sufficiency of the notification and supporting documents,
which shall be completed within 15 days from submission
of the notification. Following a determination of the
sufficiency of the notification and payment of the filing
fees, the PCC will proceed to review the transaction within
a period of 30 days (Phase I review), at which time it may
inform the parties of the need for a more comprehensive

DOING BUSINESS IN THE PHILIPPINES 57


13
PRIVACY LAWS

Overview
Government policies in the Philippines and
decisions of the Supreme Court tilt heavily toward
the protection of an individual’s right to privacy
of communications. However, the Philippines
also recognizes that the free flow of information
is vital to promote innovation and growth. Thus,
the recent trend in cases of conflict is to balance
the interests of the business sector and that of an
individual’s right to privacy.
The Philippines also enacted a Data Privacy Act
(DPA) which became effective on September
8, 2012. The DPA modeled after the European
Union General Data Protection Regulation and
the Asia-Pacific Economic Cooperation Privacy
Framework. The National Privacy Commission
(NPC) enforces the DPA and has issued the law’s
Implementing Rules and Regulations which took
effect on 9 September 2016.
Right to Privacy
Privacy of communications is a recognized right in the
Philippines under Article III, Section 3 of the Philippine
Constitution which upholds the privacy of communications
and correspondence.
Other provisions on privacy of communications can be
found in the Civil Code of the Philippines (Civil Code),
and Republic Act No. 4200 (RA No. 4200) or the Anti-Wire
Tapping Act which makes it unlawful for any person to
record any private communication without the consent
of all the parties involved in a communication. Private
communication has been interpreted by the Supreme
Court to mean one that is made between a person and
another as opposed to a speaker and the public, and to
cover communications of all types such as telephone
conversations and electronic messages.
Rights to privacy of communications, however, may
be waived so long as the waiver is not against the law,
public order, public policy, morals, or good customs, or
prejudicial to a third person with a right recognized by
law.

Data Privacy
Republic Act No. 10173, or the DPA of 2012, applies to In general, the DPA prohibits the processing of personal
the processing of all types of personal information and information without the express and recorded consent
to any natural and/or juridical person involved in personal of the data subject. The law also enumerates the
information processing, including those personal rights of data subjects (i.e., notice, access, control, data
information controllers and processors who, although portability, and the right to be indemnified by personal
not found or established in the Philippines, (1) use information controllers for damages arising from the
equipment that are located in the Philippines, or maintain unlawful processing of personal information), and the
an office, branch, or agency in the Philippines, and (2) obligations of personal information controllers and
process personal information pertaining to a Philippine processors to ensure the privacy, security, and integrity
citizen or resident, and maintain commercial links to the of personal information (including but not limited to
Philippines. a breach notification requirement). More particularly,
the DPA requires personal information controllers to
“Personal Information” is defined as any information
employ reasonable and appropriate organizational,
from which the identity of an individual is apparent or
physical, and technical measures to protect the security
can be reasonably and directly ascertained, or that, when
of personal information. At a minimum, these measures
put together with other information, would directly and
should include: (1) anti-computer hacking safeguards,
certainly identify an individual.
(2) a security policy, (3) a process for preventing and
“Sensitive personal information,” on the other hand, is mitigating security breaches, (4) contractual or other
defined as personal information: (1) about an individual’s reasonable data protection arrangements with third party
race, ethnic origin, marital status, age, color, and contractors, and (5) the appointment of an information
religious, philosophical or political affiliations; (2) about security officer who will ensure the entity’s compliance
an individual’s health, education, genetic or sexual life of with the DPA.
a person, or to any proceeding for any offense committed
In addition, the DPA creates the NPC, which is tasked with
or alleged to have been committed by such person, the
administering and implementing the provisions of the
disposal of such proceedings, or the sentence of any court
law, as well as with monitoring and ensuring compliance
in such proceedings; (3) issued by government agencies
with international standards for data protection.
peculiar to an individual which includes, but not limited
to, social security numbers, previous or current health
records, licenses or its denials, suspension or revocation,
and tax returns; and (4) specifically established by an
executive order or an act of Philippine Congress to be
kept classified.

DOING BUSINESS IN THE PHILIPPINES 59


The DPA sets forth a detailed schedule of penalties for violations of the Act, e.g.,
unauthorized processing, accessing due to negligence, improper disposal, processing for
unauthorized purposes, unauthorized access or intentional breach, concealment of security
breaches, malicious disclosure, and unauthorized disclosure of personal information and
sensitive personal information, which include both imprisonment and fines. In addition, the
NPC may also impose administrative penalties which may include compliance orders, cease-
and-desist orders, temporary or permanent ban on personal information processing, and/
or fines.

On August 25, 2016, the NPC issued the implementing Considerations for Members of
rules and regulations (Rules) of the DPA. In addition
to the more general requirements of the DPA on the the EU
processing of personal information, the Rules impose The DPA and its Rules are modeled after the general
several registration and compliance obligations on principles and requirements of the EU General Data
covered controllers and processors. The most important Protection Regulation (GDPR). Compliance with the
of these obligations are: DPA and its Rules will be easy for personal information
• Registration of Personal Data Processing Systems. controllers and processors that are already geared
Personal data processing systems operating in the towards fully complying with the GDPR in time for its
Philippines that involve the processing of sensitive effectivity on 25 May 2018.
personal information belonging to at least 1,000
individuals, or those systems which are being
operated by a personal information controller or
processor which employs at least 250 persons or who
belongs to one of the sectors identified by the NPC
as subject to the mandatory registration requirement
shall be registered with the NPC by 8 March 2018;
• Reportorial Requirements. Personal information
controllers are required to notify the NPC and
affected data subjects of a data breach within
72 hours from the discovery thereof. In addition,
covered entities shall also report to the NPC with a
summary of documented security incidents and data
breaches on an annual basis, and also notify the NPC
when automated processing becomes the sole basis
of making decisions about a data subject;
• Nature of Consent of Data Subjects. The Rules
clarify that in cases not exempt from the consent
requirement, the data subject’s consent to the
personal information processing is time-bound in
relation to the purpose of the processing. Data
sharing, even between entities belonging to the
same corporate organization, should also have the
prior consent of the affected data subjects; and
• Minimum Security Requirements; Contents of
Data Transfer Agreements between Controllers
and Processors. The Rules enumerate the specific
minimum organizational, physical, and technical
requirements which controllers and processors are
required to implement while processing personal
information. These security standards are subject
to periodic evaluation and updating by the NPC
via subsequent issuances. The Rules also contain
the minimum requirements as to the compliance
provisions to be included in any data processing
agreement between personal information
controllers and its processors.

60 DOING BUSINESS IN THE PHILIPPINES


14
ENVIRONMENTAL
REGULATIONS
Overview
The Philippines adheres to the policy of protecting and The DENR is assisted in the formulation and
advancing the right of its people to a balanced and implementation of environmental policies by the
healthy ecology. Environmental Management Bureau (EMB), local
government units, and other governmental agencies and
Philippine environmental laws consist of a series
departments.
of legislative enactments, executive decrees and
administrative regulations, each addressing a specific Presidential Decree No. 1586 (PD 1586) established the
area of concern relating to the environment. Philippine Environmental Impact Statement (EIS) System.
Environmental impact assessment (EIA) is part of project
The environmental law applicable to a particular business
planning for certain types of businesses, and is conducted
depends largely on the activities of that business.
to identify and evaluate important environmental
The Department of Environment and Natural Resources consequences, including social factors that may occur if
(DENR) is the lead agency in environmental protection a project will be undertaken. Measures to eliminate or
and administration. minimize these impacts are incorporated into project
design and operations.

Project Requirements
Development projects that are classified by law as While the terms and conditions of an EIS or an IEE may
environmentally-critical or projects within statutorily vary from project to project, as a minimum, the same
defined environmentally critical areas are required to must contain all relevant information regarding the
obtain an Environmental Compliance Certificate or ECC project’s environmental effects. The entire process of
prior to commencement of operation. The DENR through organization, administration and assessment of the
its regional offices or through the EMB, determines effects of any project on the quality of the physical,
whether a project is environmentally critical or located biological and socio-economic environment as well as
in an environmentally critical area. As a requisite for the the design of appropriate preventive, mitigating and
issuance of an ECC, an environmentally critical project enhancement measures is known as the EIS System.
is required to submit an EIS to the EMB, while a project Approval by the EMB of a project proponent’s EIS System
in an environmentally critical area is generally required successfully culminates in the issuance of an ECC by the
to submit an Initial Environmental Examination (IEE) to EMB.
the proper DENR regional office. The construction and
Essentially, the issuance of an ECC is a government
operation of a power plant and other related auxiliary
certification that: (a) the proposed project or undertaking
facilities are generally considered as environmentally
will not cause a significant negative environmental impact;
critical projects for which an EIS and ECC are mandatory.
(b) the proponent has complied with all the requirements
The EIS refers to both the document and the study of a of the EIS System; and (c) the proponent is committed
project’s environmental impact, including a discussion of to implement its approved Environmental Management
the direct and indirect consequences to human welfare Plan in the EIS or, if an IEE was required, that it shall
and ecological as well as environmental integrity. The comply with the mitigation measures provided therein.
IEE refers to the document and the study describing Thus, despite the issuance of an ECC, a grantee thereof
the environmental impact, including mitigation and must continually comply and adhere to its approved
enhancement measures, for projects in environmentally Environmental Management Plan.
critical areas.
Any person, corporation or partnership found violating
In addition to obtaining an ECC, projects that are the terms and conditions in the issuance of the ECC may
determined by the DENR to pose a significant public be liable for the suspension or cancellation of such ECC
risk to the environment are required to establish an and/or a fine. Generally, the suspension or cancellation
Environmental Guarantee Fund. The Environmental will apply only to the relevant ECC subject of the violation
Guarantee Fund is intended to compensate for any and will not extend to any other ECCs or to the projects
damage to the environment as a result of the project. covered thereby that may have been granted to an entity.
Proponents who complete an EIS must also include a
commitment to establish an Environmental Monitoring
Fund when an ECC is eventually issued. The Environmental
Monitoring Fund shall be utilized to support the activities
of a multi-sectoral team that shall monitor compliance
with the ECC and other applicable regulations.

62 DOING BUSINESS IN THE PHILIPPINES


Areas of Regulation
Presidential Decree No. 984 (PD 984), otherwise known Republic Act No. 9275, otherwise known as the “Philippine
as the National Pollution Control Decree of 1976, is the Clean Water Act of 2004” (Clean Water Act) governs water
general legislation on pollution prevention and control. quality management in all water bodies in order to abate
and control pollution from land based sources. Under the
Republic Act No. 9003 (RA 9003), or the Ecological
Clean Water Act, owners or operators of facilities that
Solid Waste Management Act of 2000, calls for the
discharge regulated effluents or wastewater flowing out
institutionalization of a national program that will
of manufacturing plants and industrial plants including
manage the control, transfer, transport, processing and
domestic, commercial and recreational facilities, must
disposal of solid waste in the country.
secure a discharge permit from the EMB. The operation
Republic Act No. 6969 (RA 6969), or the Toxic Substances of facilities that discharge regulated water pollutants
and Hazardous and Nuclear Wastes Control Act, provides without a valid discharge permit is a prohibited activity
the legal framework for the country’s program to control under the Clean Water Act, and may be punishable by a
and manage the importation, manufacture, processing, fine, closure of facility, and/or imprisonment.
distribution, use, transport, treatment and disposal of
Republic Act No. 8749 (RA 8749), or the Philippine Clean
toxic substances as well as that of hazardous and nuclear
Air Act of 1999, provides the framework for preventing,
wastes.
managing, controlling and reversing air pollution
nationwide.

Photo by Katt Baligod


15
INDUSTRY
SPECIFIC
REGULATIONS

Overview
Government policies in the Philippines and
decisions of the Supreme Court tilt heavily toward
the protection of an individual’s right to privacy
of communications. However, the Philippines
also recognizes that the free flow of information
is vital to promote innovation and growth. Thus,
the recent trend in cases of conflict is to balance
the interests of the business sector and that of an
individual’s right to privacy.
The Philippines also enacted a Data Privacy Act
(DPA) which became effective on September 8,
2012. The DPA modeled after the European Union
General Data Protection Regulation and the Asia-
Pacific Economic Cooperation Privacy Framework.
The National Privacy Commission (NPC) enforces
the DPA and has issued the law’s Implementing
Rules and Regulations which took effect on 9
September 2016.
Banking Financing Companies
Under Philippine laws, banks are entities that engage in Under Philippine law, financing companies are
the lending of funds obtained in the form of deposits. An corporations, except banks, investments houses, savings
entity intending to engage in banking in the Philippines and loan associations, insurance companies, cooperatives,
must obtain an authority or secondary license to operate and other financial institutions organized or operating
(such as a commercial banking license) from the BSP. under other special laws, that are primarily organized for
the purpose of extending credit facilities to consumers
Philippine law classifies banks into:
and to industrial, commercial, or agricultural enterprises,
A. Universal banks; by direct lending or by discounting or factoring commercial
papers or accounts receivable, or by buying and selling
B. Commercial banks; contracts, leases, chattel mortgages, or other evidences
C. Thrift banks, composed of: (i) savings and mortgage of indebtedness, or by financial leasing of movable as well
banks, (ii) stock savings and loan associations, and as immovable property. An entity intending to engage as a
(iii) private development banks; financing company must obtain an authority or secondary
license to operate as a financing company from the
D. Rural banks; Securities and Exchange Commission (SEC). If the entity
E. Cooperative banks; intends to perform quasi-banking functions, such entity
must secure a quasi-banking license from the BSP.
F. Islamic banks; and
Under the Financing Company Act, as amended, a
G. Other classifications of banks as determined by the financing company must have a paid-up capital ranging
BSP. from at least PHP2,500,000 to PHP10,000,000 million,
depending on where the financing company will set up
Philippine law provides that foreign individuals and
its office in the Philippines. Foreign citizens may own up
non-bank corporations may own or control up to 40%
to 100% of the shares in a financing company subject to
(individual or aggregate) of the voting stock of a universal
certain conditions.
bank, commercial bank, thrift bank or rural bank.
By way of exception, foreign banks may own up to 100%
of the voting stock of a universal bank, commercial bank,
thrift bank or rural bank with prior approval from the BSP. Lending Companies
In determining whether or not approval will be issued, the
BSP will consider whether reciprocity rights are enjoyed Under Philippine law, lending companies refer to
by Philippine banks in the country of the foreign bank. corporations engaged in granting loans from its own
capital funds or from funds sourced from not more
than 19 persons. The term “lending companies” exclude
banking institutions, investment houses, savings and loan
associations, financing companies, pawnshops, insurance
companies, cooperatives and other credit institutions
already regulated by law.
A company intending to perform activities as a lending
company must obtain an authority or secondary license
to operate as a lending company from the SEC.
Under the Lending Company Act, as amended, a lending
company must have a minimum paid-up capital of
PHP1,000,000. Foreign citizens are allowed to own up
to 100% of the shares in a lending company subject to
certain conditions.
However, no foreign national may be allowed to own
shares in a lending company unless the country of which
such person is a national accords reciprocal rights to
Filipinos.

DOING BUSINESS IN THE PHILIPPINES 65


Credit card issuers and acquirers
Under the Credit Card Industry Regulation Law (Credit The Credit Card Law vests the authority to supervise all
Card Law), a credit card issuer is a bank or a corporation credit card issuers and acquirers on the BSP. However,
that offers the use of its credit card. On the other hand, the Credit Card Law does not provide any BSP licensing
a credit card acquirer refers to an institution that accepts requirement for credit card issuers and acquirers. The
and facilitates the processing of credit card transactions Credit Card Law took effect on 16 August 2016 and its
initially accepted by the merchant. implementing rules and regulations have not been issued
to date. The implementing rules and regulations may
impose BSP licensing requirements on credit card issuers
and acquirers.

Digital payment services


The BSP recently issued the regulatory framework for Virtual currency exchanges
entities engaged in digital payment services including
BSP regulations define virtual currency as any type of
remittance and transfer companies and virtual currency
digital unit that is used as a medium of exchange or a form
exchanges.
of digitally stored value created by agreement within the
Remittance and transfer companies community of virtual currency users. Virtual currencies
are broadly construed to include digital units of exchange
The BSP regulates remittance and transfer companies
that have a centralized repository or administrator,
(such as remittance agents, remittance platform
are decentralized and have no centralized repository
providers and e-money issuers) or entities that provide
or administrator, or may be created or obtained by
money or value transfer service. Remittance and transfer
computing or manufacturing effort.
companies are required to register with the BSP.
The BSP regulates virtual currency exchanges or entities
Foreign citizens are allowed to own up to 100% of the
that offer services or engages in activities that provide
shares in a remittance and transfer company. Based on
facility for the conversion or exchange of fiat currency to
BSP regulations, remittance and transfer companies
virtual currency or vice versa. A virtual currency exchange
must meet benchmark capital requirements ranging from
must obtain a certificate of registration to operate as a
PHP 10,000,000 to PHP 100,000,000, depending on the
remittance and transfer company from the BSP.
category.
The BSP does not impose nationality requirements on a
virtual exchange.

SECURITIZATION ACT
The Securitization Act provides the legal and regulatory In the securitization process, loans, receivables or similar
framework for asset securitization, and grants tax financial assets with an expected cash payment stream
exemptions and other incentives in favor of securitization (Assets) are sold on a without recourse basis by a seller to
transactions in the Philippines. It is designed to create a a special purpose entity (SPE). The SPE issues to investors
favorable capital market environment for asset-backed ABS that depend, for their payment, on the cash flow
securities (ABS) and to facilitate the development of from the Assets. The issuance of the ABS must be in
a secondary market for residential mortgage-backed accordance with the plan for securitization approved by
securities. the SEC.

66 DOING BUSINESS IN THE PHILIPPINES


Insurance
Entry of Foreign Insurance Companies The minimum paid-up capital and net worth requirement
must remain unimpaired for the continuance of the
A certificate of authority must be obtained from the
license. Foreign insurance companies are required to set
Philippine Insurance Commission (IC) before a person can
aside an amount corresponding to the legal reserves of
engage in the insurance business.
the policies written in the Philippines, and such amount
There are no foreign equity restrictions on insurance may be invested only in certain classes of acceptable
companies. Philippine securities subject to aggregate limits.

An insurance company may be established as a domestic Further insurance companies must comply with solvency
company, a branch of a foreign insurance company, or requirements. The IC adopts a risk-based capital approach.
a mutual benefit association. (The discussion below
The President of the Philippines has the power to order
focuses on domestic insurance companies and branches
a periodic review of the capital structures of insurance
of foreign insurance companies.) A foreign insurance
companies, to determine the capital adequacy of the
company may do business in the Philippines, provided (i)
local insurance industry, every two (2) years from and
it is among the top 200 foreign insurance corporations
after the integration and liberalization of the financial
globally, or among the top 10 insurance companies in its
services (including insurance,) in the ASEAN Region.
country of origin, and (ii) it has been doing business for
the last 10 years as of the date of its application for IC Acquisition of control of a domestic insurance company
approval.
Prior IC approval must be obtained for an acquisition by
In addition, if the foreign insurance company will establish a foreign company of control of a domestic insurance
a domestic insurance company or a branch (as opposed company. “Control” means the possession, directly or
to acquiring shares in an existing domestic insurance indirectly, of the power to direct or cause the direction
company), it must be (i) widely owned and/or publicly of the management and policies of a person, whether
listed in its country of origin, or (ii) majority-owned by the through the ownership of voting securities by a contract
government of the country of origin. The term “widely- other than a commercial contract for goods or non-
owned” means that not a single stockholder of the management services or otherwise. Control is presumed
applicant owns more than 20% of its voting stock; while to exist if any person directly or indirectly owns, controls
“publicly listed” means that its shares of stock are listed in or holds with the power to vote 40% or more of the
the stock exchanges. voting securities of an insurance company.
Minimum capitalization requirement In reviewing a proposed acquisition of control, the IC will
consider the following factors:
A new domestic insurance or a branch must have a
minimum capital paid-up capital / assigned capital of (1) the financial condition of the acquiring person and the
PHP1 billion.6 In addition: insurer;
• In the case of a domestic company, the IC may require (2) the trustworthiness of the acquiring person or any of
the stockholders of a new insurance company to its officers or directors;
pay in cash to the company, in proportion to their
(3) the plan for the proper and effective conduct of the
subscription interests, a contributed surplus fund of
insurer’s operations;
not less PhP100 million.
(4) the source of the funds or assets for the acquisition;
• In the case of a branch, in must deposit with the IC,
for the benefit of policyholders and creditors of the (5) the fairness of any exchange of stock, assets, cash or
foreign insurer in the Philippines, securities which other consideration for the stock or assets to be received;
have a market value of not less than PhP1 billion.
The securities must be acceptable to the IC, and at (6) whether the effect of the acquisition may be
least 50% of the securities must consist of bonds or substantially to lessen competition in any line of
other instruments of debt of the Government of the commerce in insurance or to tend to create a monopoly
Philippines. therein; and,

Existing insurance companies (domestic companies and (7) whether the acquisition is likely to be hazardous or
branches) as well as those to be established before 31 prejudicial to the insurer’s policyholders or stockholders.7
December 2019 must comply with the following net
worth requirement:

Minimum net worth Compliance date


PhP900 million 31 December 2019
6 Section 194, Amended Insurance Code. See also IC Circular Letter No. 2015-20-A
PhP1.3 billion 31 December 2022
7 IC Circular Letter No. 2014-37.

DOING BUSINESS IN THE PHILIPPINES 67


Registration with the Anti-Money Laundering Council
Insurance companies are considered ‘covered persons’
Healthcare
under the Anti-Money Laundering Act. A new insurance Health Products
company must register as such with the Anti-Money
Laundering Council. Republic Act No. 3720, as amended, or the “Food and
Drug Administration Act” and its implementing rules
Insurance Brokers and Agents and regulation (collectively, the FDA Act), regulates
A person (an individual, partnership, or corporation) the manufacture, importation, distribution, marketing,
intending to act as an insurance broker or an insurance advertising and related activities for health products.
agent must obtain authority from the IC. The FDA Act defines health products as including drugs,
medical devices, cosmetics, and health supplements,
An insurance agent refers to a person who, for among others.
compensation, solicits or obtains insurance on behalf of
any insurance company or transmits for a person other Entities that deal with health products are generally
than himself an application for a policy or contract of required to obtain a license to operate from the Philippine
insurance to or from such company or offers or assumes Food and Drug Administration (FDA).
to act in the negotiating of such insurance. On the other Furthermore, certain health products, such as drugs,
hand, an insurance broker refers to any person who, for certain medical devices, and health supplements, must
any compensation, commission or other thing of , acts or be registered with the FDA.
aids in any manner in soliciting, negotiating or procuring
the making of any insurance contract or in placing Others, such as cosmetics, must only be notified to the
risk or taking out insurance, on behalf of an insured FDA.
other than himself. A reinsurance broker is one who,
The labels of health products must also comply with the
for compensation, not being a duly authorized agent,
labelling requirements under FDA regulations.
employee or officer of an insurer in which any reinsurance
is effected, acts or aids in any manner in negotiating Clinical trials
contracts of reinsurance, or placing risks of effecting
reinsurance, for any insurance company authorized to do Clinical trials in the Philippines are regulated by the FDA
business in the Philippines. and the Philippine National Health Research System
(PNHRS) through the Philippine Health Research Ethics
Board (PHREB).
Clinical trials may be undertaken by sponsors or Contract
Research Organizations (CRO). A sponsor refers to an
individual, company, institution, organization, or an entity
which takes responsibility for the initiation, management,
and/or financing of a clinical trial. On the other hand, a
CRO refers to a person or an organization (commercial,
academic, or other) contracted by a sponsor to perform
one of more of the sponsor’s trial-related duties and
functions.
Current FDA regulations require a sponsor and the CRO
to obtain an LTO from the FDA. Furthermore, clinical trials
must be conducted according to an approved clinical trial
protocol from the FDA.

68 DOING BUSINESS IN THE PHILIPPINES


Energy
Regulatory framework foreign equity limitation of a maximum of 40%. By way of
exception, large-scale geothermal projects undertaken by
Republic Act No. 9136, also known as the Electric Power
way of foreign technical or financial assistance (FTAA) can
Industry Reform Act of 2001 (EPIRA) primarily governs
be 100% foreign-owned. Hence, an RE Developer must
the electric power industry and its participants, together
be at least 60% Filipino-owned, unless the RE project is
with other special laws. The main objectives of the EPIRA
a large-scale geothermal project undertaken by way of
include ensuring and accelerating the total electrification
FTAA.
of the country and the quality, reliability, security and
affordability of the supply of electric power. 2. Transmission
For this purpose, the EPIRA has mandated the Department Transmission of electricity refers to the conveyance of
of Energy (DOE) to supervise the restructuring of the electricity through the high voltage backbone system or
electric energy industry. The EPIRA also created the the Philippine Grid. Under the EPIRA, the transmission
Energy Regulatory Commission (ERC), an independent of electricity shall be a regulated common electricity
quasi-judicial regulatory body. Its functions include to carrier business, which is considered a public utility
promote competition, encourage market development, requiring a franchise from the Philippine Congress. In this
ensure customer choice and penalize abuse of market connection, the 1987 Philippine Constitution imposes
power in the restructured electricity industry. The a 60% Filipino ownership requirement on public utility
Wholesale Electricity Spot Market was also created to operators. Accordingly, corporations and associations
serve as the mechanism for identifying and setting the engaged in the transmission of electricity may have up
price of actual variations from the quantities transacted to a maximum of 40% foreign equity and are required to
under contracts between sellers and purchasers of obtain a franchise from the Philippine Congress.
electricity.
In 2009, the transmission sector was privatized through
On the other hand, Republic Act No. 9513, also known a grant of a 25-year concession to the National Grid
as the Renewable Energy Act of 2008 (RE Act) provides Corporation of the Philippines (NGCP) to operate the
for a framework for the accelerated development and Philippine Grid. A congressional franchise was granted to
advancement of Renewable Energy (RE) Resources, and NGCP for this purpose. Prior to the privatization, National
the development of a strategic program to increase Transmission Corporation (or TRANSCO) assumed the
the utilization of RE Resources. The RE Act governs the electrical transmission function of the National Power
renewable energy power generation in the Philippines. Corporation, including the authority and responsibility for
Under the RE Act the DOE was designated as the lead the planning, construction and centralized operation and
agency to implement the provisions thereof. The National maintenance of the Philippine Grid.
Renewable Energy Board (NREB) and Renewable Energy
3. Distribution
Management Bureau were also created to perform the
functions necessary to attain the objectives of the RE Act. Distribution of electricity refers to the conveyance
of electric power by a distribution utility through its
Organization of the Philippine electric power industry;
distribution system. Under the EPIRA, the distribution
Foreign equity restrictions
of electricity to end-users shall be a regulated common
The EPIRA restructured and divided the Philippine carrier business requiring a franchise. The EPIRA provides
electric power industry into four sectors: generation, that the power to grant franchises to persons engaged in
transmission, distribution and supply. the distribution of electricity shall be vested exclusively in
the Philippine Congress. Thus, similar to transmission of
1. Generation
electricity, corporations or associations that will engage
Generation of electricity refers to the production of in the business of distribution of electricity must at least
electricity by a generation company or a co-generation be 60% Filipino-owned and must also obtain a franchise
facility. Generally, generation of electricity is not subject from the Philippine Congress.
to foreign equity limitations. According, a company
4. Supply
engaged in the generation of electricity may be 100%
foreign-owned. “Supply of electricity” means the sale of electricity by
authorized persons or entities. There are no foreign
However, regulations issued by the DOE pursuant to the
equity restrictions imposed on corporations engaged in
RE Act impose a Filipino nationality requirement of at least
the business of supply of electricity to the contestable
60% on the generation of electricity from RE Resources.
market subject to meeting certain requirements such as
Accordingly, RE Developers9 are generally subject to a
capitalization.

8 Renewable Energy Resources refer to energy resources that do not have an 9 RE Developers refers to individual/s or juridical entity created, registered and/
upper limit on the total quantity to be used. Such resources are renewable on a or authorized to operate in the Philippines in accordance with existing Philippine
regular basis, and whose renewal rate is relatively rapid to consider availability laws and engaged in the exploration, development and utilization of RE resources
over an indefinite period of time. These include, among others, biomass, solar, and actual operation of RE systems/facilities.
wind, geothermal, ocean energy, and hydropower conforming with internationally
accepted norms and standards on dams, and other emerging renewable energy
technologies.
DOING BUSINESS IN THE PHILIPPINES 69
Mining
Philippine Constitution and Mining Law These three types of mineral agreements are:
Under the 1987 Philippine Constitution, the state can • MPSA, under which the Government grants to the
undertake the exploration, development, and utilization MPSA holder the exclusive right to conduct mining
of the natural resources or it can enter into agreements operations within a contract area. The share of the
with private parties or contractors under revenue-sharing government is in the form of excise tax equivalent to
or production-sharing arrangements. The general rule, as a percentage of the gross output. The MPSA holder
stated in the Philippine Constitution, is that contractors, will provide the financing, technology, management
with whom the state can enter into agreements for the and personnel necessary for the implementation of
exploration, development, and utilization of natural the MPSA;
resources, must be Filipino citizens or corporations
• Co-production Agreement, under which the
whose capital is at least 60% Filipino-owned. A mineral
Government will provide inputs to the mining
agreement must be held by a Filipino citizen or by a
operations other than the mineral resource;
company that is at least 60% Filipino-owned.
• Joint Venture Agreement, under which a joint
The foreign equity limitation is removed for large-scale
venture company is organized by the government
exploration, development, and utilization of minerals
and the contractor with both parties holding equity
and petroleum, and other mineral oils. This exception
shares. In addition to earnings from the equity, the
is implemented through the Financial or Technical
government will be entitled to a share in the gross
Assistance Agreement (FTAA). Furthermore, an
output.
Exploration Permit (EP) and a Mineral Processing Permit
(MPP) can be held by a corporation that is up to 100% 3. FTAA
foreign-owned.
The Philippine Constitution provides that the President
Under the Republic Act No. 7942 or the Philippine Mining may, on behalf of the government, enter into agreements
Act of 1995 (Mining Act), there are three types of mineral involving either technical or financial assistance for large
agreements: Mineral Production Sharing Agreement scale exploration, development and utilization of minerals
(MPSA), Co-Production Agreement, and Joint Venture according to the general terms and conditions provided
Agreement. by law, based on real contributions to the economic
growth and general welfare of the Philippines.
Under the Implementing Rules and Regulations of the
Mining Act (Mining Act IRR), an applicant that wants to To implement this Constitutional provision and to promote
conduct exploration activities over a specific area needs to investments from both domestic and international
apply for and obtain an EP. Depending on the exploration sources, the Mining Act authorizes the President to
results, the EP can be converted into an MPSA or an FTAA. execute and approve on behalf of the government FTAAs
to be entered into with qualified entities for large scale
Mining Act
exploration, development and commercial utilization of
The Mining Act governs the exploration, development, mineral resources. The minimum project for development
processing and utilization of mineral resources in the and construction for an FTAA is Fifty Million United States
Philippines. The Mining Act and the Mining Act IRR Dollars (US$50,000,000).
define these agreements, delineate the various mining
The FTAA holder is granted the exclusive rights to explore,
rights recognized in the Philippines and provide the
mine, utilize, process, refine, market, transport, export
requirements to acquire these mining rights.
and dispose of minerals and mineral products and by
1. EP products that may be derived or produced from the FTAA
area, subject to such permitting requirements that may
The acquisition of mineral rights is a process that begins
be applicable under pertinent laws, rules and regulations.
with the acquisition of an EP. An EP is a grant from the
Philippine government that gives the permit holder 4. MPP
the right to conduct exploration for all minerals within
A MPP refers to permit granted by the Philippine
a specified area. An EP allows the holder to conduct
government to allow the holder thereof undertake
“exploration”, which is defined under the Mining Act
mineral processing. Mineral processing refers to the
as “searching or prospecting for mineral resources by
milling, beneficiation, leaching, smelting, cyanidation,
geological, geochemical and/or geophysical surveys,
calcination or upgrading of ores, minerals, rocks, mill
remote sensing, test pitting, trenching, drilling, shaft
tailings, mine waste and/or other metallurgical by-
sinking, tunneling or any other means for the purpose of
products or by similar means to convert the same into
determining their existence, extent, quality and quantity
marketable products.
and the feasibility of mining them for profit.”
2. Mineral Agreements

70 DOING BUSINESS IN THE PHILIPPINES


Telecommunications
The Telecoms Act Value-Added Services
The Public Telecommunications Policy Act of the Philippines Regulated telecommunications services also include
(RA 7925 or the Telecoms Act) and its implementing Value-Added Service (VAS). The Telecoms Act provides
rules regulate the performance of telecommunications that a VAS operator is “an entity which, relying on the
services in the Philippines. Telecommunications services transmission, switching and local distribution facilities of
are defined as those services involving “any process which the local exchange10 and inter-exchange operators11, and
enables a telecommunications entity to relay and receive overseas carriers, offers enhanced services beyond those
voice, data, electronic messages, written or printed ordinarily provided for by such carriers.” The implementing
matter, fixed or moving pictures, words, music or visible rules of the Telecoms Act define VAS as “a service which
or audible signals or any control signals of any design and adds a feature or value to basic telephone service not
for any purpose by wire, radio or other electromagnetic, ordinarily provided by a public telecommunications entity
spectral, optical or technological means”. such as format, media, conversion, encryption, enhanced
security features, paging, internet protocol, computer
The Public Service Law processing and the like.” Under the Telecoms Act, a VAS
provider is not considered a PTE, provided that it does not
The Philippines’ Public Service Law (Commonwealth Act
put up its own network.
No. 146) is the law that applies to industries/entities
engaged in “public service” in general. The Public Service VAS providers are required to register with the NTC and
law therefore applies to telecommunications services submit quarterly reports of the operation. Under NTC
offered to the public. regulations, only entities which are at least 60% Filipino-
owned may register as VAS providers. In practice, however,
The regulatory body in charge of telecommunications
the NTC differentiates between non-regulated VAS and
services in the Philippines is the National
regulated VAS. The NTC only applies the VAS restriction
Telecommunications Commission (NTC). By virtue of
requirements (i.e. the registration/ nationality restriction
the authority granted to it by the Telecoms Act and the
requirements) to regulated VAS providers. VAS providers
Public Service Law, the NTC has regulatory and quasi-
are regulated if they have the following characteristics:
judicial powers. The NTC can also enforce compliance of
(1) the VAS services are provided directly to the Philippine
its issuances by initiating complaints (which may result
public; and (ii) the VAS services are provided for free.
in fines and imprisonment) and/or imposing fees and
penalties.

Provision of
Telecommunications Services
by a Public Telecommunications
Entity (PTE)
The provision of telecommunications services by a Public
Telecommunications Entity (PTE) is heavily regulated.
A PTE is a person, firm, partnership or corporation,
government or private, engaged in the provision of
telecommunications services (a) to the public; (b) for
compensation. Generally, a PTE is required to secure a
legislative franchise from the Philippine Congress and
a CPCN or Provisional Authority (PA) from the NTC. The
franchise contains conditions as to its grant, such as
restrictions on transfers and annual reporting obligations.
On the other hand, the CPCN issued by the NTC certifies
that the telecommunications service to be provided by the
enfranchised entity is feasible and necessary. It is usually
granted after an entity’s showing of its legal, technical
and financial capability to provide the contemplated
service. Additionally, a PTE is required to be at least 60%
Filipino owned.

10 Local exchange operators are entities providing transmission and switching 11 It is an entity, sometimes referred to as carrier’s carrier or national backbone
of telecommunications services, primarily but not limited to voice-to-voice in a network operator, authorized to install, own and operate facilities which
geographic area anywhere in the Philippines. connect local exchanges within the Philippines and to engage in the business of
interexchange national long distance services.

DOING BUSINESS IN THE PHILIPPINES 71


VoIP as Value-Added Services
Voice Over Internet Protocol (VoIP) is a form of VAS that
is governed by its own set of rules. VoIP services intended
to be offered for use by the public for compensation is
expressly regulated by the NTC. Service providers which
intend to offer such service are required to register
with the NTC as VoIP providers. Further, “any person or
entity that intends to derive or source VoIP from a duly
registered VoIP provider under an agreement to resell
the service directly to retail end-user customers” must
also register with the NTC as a VoIP Reseller.

Cybercrime Prevention Act


The Philippines’ Cyber Crime Prevention Act of 2012
(RA No. 10175 or the Cyber Crime Act) requires service
providers12 to preserve the integrity of “traffic data
and subscriber information relating to communication
services” for at least six (6) months from the date of the
transaction. Content data (defined as communication
or content of communication, the meaning or purport
of the communication, or the message or information
being conveyed by the communication, other than traffic
data), shall also be preserved following an order from law
enforcement authorities.

Importation / distribution of
telecommunications equipment
Under current NTC regulations, type approval or type
acceptance is required for all customer premises
equipment (CPE) and radio transmitters and transceivers,
i.e. devices capable of emitting radio waves or energy. Type
approval refers to the process by which an equipment is
evaluated for conformance to established standards, by
undergoing laboratory tests and measurements. Type
acceptance on the other hand is a process by which
an equipment is evaluated for acceptability for use
on the basis of type approval tests done by reputable
foreign approval or certification agencies. The importer/
distributor of CPEs and radio transmitters/transceivers
should secure authorization from the NTC in order to
supply these equipment.
An import permit must be secured from the NTC in
order to import equipment that requires type approval
or acceptance. The NTC import permit will be required
by the Philippine Bureau of Customs as a condition for
customs clearance.

Considerations for Members of


the EU
There are no special considerations/requirements under
Philippine telecommunication laws for nationals of EU
Member States.

12 ”Service providers” is broadly defined under the Cyber Crime Prevention Act
as “(1) any public or private entity that provides to users of its service the ability
to communicate by means of a computer system; and (2) Any other entity that
processes or stores computer data on behalf of such communication service or
users of such service.”
16
DISPUTE
RESOLUTION

Dispute Resolution in
the Philippines
Dispute Resolution in the Philippines does not
provide for any special rule, regulation, treatment
and/or circumstance to European corporations.
The general laws and rules on litigation,
arbitration and other modes of alternative dispute
resolution apply to European corporations, as to
other domestic or foreign corporation.
Legal and Judicial System
Type of Legal System Main Sources of Law
The Philippine Legal System is a blend of the Roman civil The main sources of Philippine law are the Constitution,
law and the Anglo-American common law systems. The statutes, treaties and conventions, and judicial decisions.
civil law system operates in the areas of family relations, The Constitution is the fundamental law of the land and
property, succession, contracts and criminal law, while as such, it is authority of the highest order against which
statutes and principles of common law origin are evident no law can prevail. Every official action, to be valid, must
in fields such as constitutional law, procedure, corporation conform to it. On the other hand, statutes are enactments
law, negotiable instruments, taxation, insurance, labor passed by the Philippine Legislature. Statutes also include
relations, and banking laws. Islamic personal law is presidential decrees issued during the martial law period,
recognized and is operative in some parts of Mindanao and executive orders issued by the President under the
with the establishment of Shari’ah courts and the Shari’ah 1986 Provisional “Freedom” Constitution.
Bar.
Treaties entered into by the Philippines with other states
have the same force of authority as legislative enactments.
Philippine law is also derived from case decisions because
the Civil Code provides that “judicial decisions applying or
interpreting the laws or the Constitution shall form part
of the legal system of the Philippines.” Only decisions of
the Supreme Court, however, establish jurisprudence and
are binding on all other courts.

The Courts
Trial Courts required to file a Response within ten days from receipt
of the summons. The parties must appear personally,
At the first level are the Metropolitan Trial Courts (MeTC), and lawyers are not allowed to appear unless they are
Municipal Trial Courts (MTC), the Municipal Trial Courts in the plaintiffs or defendants. At the hearing, the judge
Cities (MTCC), and Municipal Circuit Trial Courts (MCTC). is required to exert efforts to bring the parties to an
MeTCs are stationed by law in the cities and municipalities amicable settlement. If such efforts fail, the judge shall
making up the metropolitan areas such as Metro Manila, proceed to hear the case and issue a decision on the same
Cebu, and Davao. In cities outside the metropolitan areas, day as the hearing. The decision is final and executory and
courts of the first level are called Municipal Trial Courts in cannot be appealed.
Cities. There is an MTC in every municipality, and an MCTC
presides over two or more municipalities grouped into a At the second level are the Regional Trial Courts. The
circuit. Philippines is divided into 13 regions and in each region
there is a Regional Trial Court that may have one or more
Courts of the first level are essentially trial courts. They branches. Like the first level courts, Regional Trial Courts
try and decide only cases specified by law. These courts are trial courts. They are courts of general jurisdiction;
have jurisdiction over cases of ejectment, recovery of they try and decide not only the particular classes or
personal property with a value of not more than P300,000 kinds of cases assigned to them by law, but also those
(or P400,000 in Metro Manila), cases involving title to or which are not otherwise within the exclusive jurisdiction
possession of real property where the assessed value of of first level courts or any other tribunal. Regional Trial
the property is not more than P20,000 (or P50,000 in Courts also exercise appellate jurisdiction over decisions
Metro Manila), exclusive of interest, damages of whatever rendered by the first level courts.
kind, attorney’s fees, litigation expenses, and costs, the
amount of which must be specifically alleged. These Regional Trial Courts have jurisdiction over cases, the
courts also have delegated jurisdiction over cadastral or subject matter of which, is incapable of pecuniary
land registration cases covering lots where there is no estimation; or those involving title to, or possession of,
controversy or opposition, or contested lots where the real property where the assessed value of the property
value does not exceed P100,000. exceeds P20,000 (or P50,000 in Metro Manila), except
cases of ejectment; all actions in admiralty and maritime
First level trial courts have also been given jurisdiction jurisdiction where the demand or claim exceeds P300,000
over small claims cases, which are defined as actions for (or P400,000 in Metro Manila); and those where the
payment of money where the value of the claim does demand, exclusive of interest, damages of whatever kind,
not exceed P200,000 exclusive of interest and costs. The attorney’s fees, litigation expenses, and costs, or the
action is commenced by filing a Statement of Claims, in value of the personal property in controversy exceeds
a standard form issued by the Supreme Court, together P300,000 (or P400,000 in Metro Manila).
with supporting affidavits and documents. No formal
pleading is necessary. The defendant, once summoned, is

74 DOING BUSINESS IN THE PHILIPPINES


Appellate Courts
Litigation
At the third level is the Court of Appeals. It is essentially
an appellate court. While it exercises exclusive original
jurisdiction over actions for annulment of judgments of Commencing Proceedings
Regional Trial Courts, the Court of Appeals principally An action is generally commenced by the filing of a
exercises exclusive appellate jurisdiction over all final complaint containing a statement of the plaintiff’s cause
judgments, decisions, resolutions, orders or awards or causes of action. The complaint is required to contain
of Regional Trial Courts and quasi-judicial agencies, a certification against forum shopping to the effect that
instrumentalities, boards or commissions, except those the plaintiff has not commenced any action or filed any
falling within the appellate jurisdiction of the Supreme claim involving the same issue(s) in any court, tribunal or
Court in accordance with the Constitution. The Court of quasi-judicial agency and to the best of his knowledge,
Appeals may review questions of fact or mixed questions no such other action or claim is pending therein. Failure
of fact and law. to comply with this requirement is a ground for dismissal
Appeal of decisions rendered by the Regional Trial of the case. The filing of the complaint must also be
Courts in the exercise of the latter’s original jurisdiction accompanied by the payment of the prescribed docket
is a matter of right; but appeal of decisions rendered fee; otherwise, the trial court will not acquire jurisdiction
by the Regional Trial Courts in the exercise of appellate over the case.
jurisdiction is a matter of discretion. Upon the filing of the complaint and the payment of
The Supreme Court is the highest court of the land. It is the requisite legal fees, the clerk of court will issue the
the court of last resort, from whose judgment no appeal corresponding summons to the defendant, together with
lies. It exercises appellate jurisdiction over cases decided a copy of the complaint.
by the Court of Appeals and the Regional Trial Courts. As When the defendant is a foreign private juridical entity
a general rule, appeals to the Supreme Court are not a which has transacted business in the Philippines, service of
matter of right and only questions of law may be raised summons may be made on its resident agent designated
in such appeals. The only exception is with respect to in accordance with law for that purpose, or, if there is no
criminal cases where the penalty of death,13 reclusion such agent, on the government official designated by law
perpetua, or life imprisonment has been imposed by the to that effect, or on any of its officers or agents within
lower courts. Such cases are subject to automatic review the Philippines. If the foreign private juridical entity is not
by the Supreme Court, and both issues of fact and law registered in the Philippines or has no resident agent,
may be raised. service may, with leave of court, be effected out of the
Philippines through any of the following means:
Language of the Courts
1. By personal service through the appropriate court
The language used in and by the courts is English (i.e.,
in the foreign country with the assistance of the
in hearings, pleadings, court orders and decisions).
Department of Foreign Affairs;
Statements made in court in another language are
required to be translated to English. 2. By publication in a newspaper of general circulation in
the country where the defendant may be found and
by serving a copy of the summons and the court order
by-registered mail at the last known address of the
defendant;
3. By facsimile or any recognized electronic means that
can generate proof of service; or
4. By such other means as the court may, in its discretion,
direct.

Piloting of a New System for


Speedy Court Trial
The Supreme Court recently approved the piloting
of proposed revisions to the rules on civil procedure
on preliminary conference and trial. The pilot courts
are selected first and second level courts in Quezon
City, Makati, Angeles, Iloilo, Davao and Cebu. The
proposed rules include use of video-conferencing in the
preparation of judicial affidavits, the preparation of a
terms of reference during preliminary conference, giving
the court the discretion to conduct alternate trial (where
the parties take turns in presenting their witnesses) or
13 The imposition of the Death Penalty has been suspended by Republic Act No.
9346. face-to-face trial (where witnesses from contending

DOING BUSINESS IN THE PHILIPPINES 75


sides sit face-to-face around a table in a non-adversarial Receivership
environment, and answer questions from the court as
One or more receivers may be appointed by the court
well as the parties’ counsels respecting the factual issues
where the action is pending, or by the Court of Appeals or
under consideration).
the Supreme Court, or a member thereof, in the following
Default Judgment cases:

If the defendant fails to file an answer within the required A. When the applicant has an interest in the property or
period, the court may issue an order of default upon fund which is the subject of the action or proceeding,
motion of the plaintiff. The court will then proceed to and that such property or fund is in danger of being lost,
render judgment as the pleading may warrant, unless removed, or materially injured;
the court in its discretion requires the claimant to submit B. When, in an action for foreclosure, it appears that
evidence. A judgment rendered against a party in default the property is in danger of being wasted or dissipated
must not exceed the amount or be different in kind from or materially injured, and that its value is probably
that sought in the pleading. The court may not award insufficient to discharge the mortgage debt, or that the
unliquidated damages. parties have so stipulated in the contract of mortgage;
The order of default may be set aside, upon motion C. To preserve the property during appeal, or to dispose
filed by the party declared in default, at any time after of it according to the judgment, or to aid execution when
notice and before judgment, by a showing that the the execution or the judgment obligor refuses to apply
failure to answer was due to fraud, accident, mistake, or his property in satisfaction of the judgment, or otherwise
excusable negligence, and that the defaulting party has a to carry the judgment into effect;
meritorious defense.
D. Whenever it is the most convenient and feasible means
In any case, the party declared in default is entitled to of preserving, administering, or disposing of the property
notice of subsequent proceedings, but may not take part in litigation.
in the trial.
Replevin
Summary Judgment A party praying for the recovery of possession of personal
A summary judgment, upon motion of either party, is property may, at the commencement of the action or at
granted by the court for an expeditious settlement of any time before filing an answer, apply for an order for
the case if it appears from the pleadings, affidavits, the delivery of such property to him.
depositions and admissions that, except as to the amount Support Pendente Lite
of damages, there are no genuine questions or issues of
fact involved and that the movant is entitled to a judgment At the commencement of the proper action or
as a matter of law. Summary judgment may be rendered proceeding, or at any time prior to the judgment or final
upon the whole case or only on parts thereof where some order, a verified application for support pendente lite may
facts appear to be without genuine controversy. be filed by any party stating the grounds for the claim and
the financial conditions of both parties, and accompanied
Provisional Remedies by affidavits, depositions, or other authentic documents
in support thereof.
Preliminary Attachment
At the commencement of the action or at any time Discovery/Disclosure
before entry of judgment, a plaintiff, or any proper party It is the duty of each contending party to lay before
may have the property of the adverse party attached as the court all the material and relevant facts known to
security for the satisfaction of any judgment that may him, suppressing or concealing nothing, nor preventing
be recovered in certain cases involving fraud or intent to another party from also presenting all the facts within
defraud creditors. his knowledge. As only the ultimate facts are set forth
Preliminary Injunction in pleadings, evidentiary matters may be inquired into
and learned by the parties before the trial through the
A preliminary injunction is an order granted at any stage deposition-discovery mechanism. Refusal to comply with
of an action or proceeding prior to the judgment or final an order for discovery may result in various sanctions
order, requiring a party or a court, agency, or a person to against the disobedient party, including refusal to allow
refrain from a particular act or acts. It may also require said party to support or oppose designated claims or
the performance of a particular act or acts, in which case defenses, prohibiting said party from introducing in
it shall be known as a preliminary mandatory injunction. evidence designated documents or things or items of
If, based on affidavits or on the verified application, it is testimony, striking out of pleadings or parts thereof,
shown that the applicant may suffer great or irreparable dismissal of the action, or rendition of a judgment by
injury before the matter can be heard on notice, the court default against said party.
may issue a temporary restraining order before a hearing However, despite the provisions allowing various types of
is conducted. discovery (e.g., depositions, interrogatories, request for
admissions), resort to such procedures is not prevalent in
the Philippine legal system.

76 DOING BUSINESS IN THE PHILIPPINES


Remedies the respondent to desist from further proceedings in the
action or matter specified therein.
Motion for New Trial
When any tribunal, corporation, board, officer or person
Within 15 days from receipt of the decision or judgment, unlawfully neglects the performance of an act which the
a party may move to set aside the judgment or final order law specifically enjoins as a duty resulting from an office,
and grant a new trial for one or more of the following trust, or station, or unlawfully excludes another from the
grounds: use and enjoyment of a right or office to which such other
a. Fraud, accident, mistake or excusable negligence which is entitled, the person aggrieved may file a verified petition
ordinary prudence could not have guarded against and by to command the respondent to do the act required to be
reason of which such party has probably been impaired in done to protect the rights of the petitioner, and to pay
his rights; or the damages sustained by the petitioner by reason of the
wrongful acts of the respondent.
b. Newly discovered evidence, which a party could not,
with reasonable diligence, have discovered and produced As a rule, the foregoing remedies are available only if
at the trial, and which if presented would probably alter there is no appeal, or any plain, speedy, and adequate
the result. remedy in the ordinary course of law.

Motion for Reconsideration The petition must be filed not later than 60 days from
notice of the judgment, order or resolution being
Within 15 days from receipt of the decision or judgment, questioned. In case a motion for reconsideration or new
a party may move for reconsideration on the grounds that trial is timely filed, the petition must be filed not later
the damages awarded are excessive, that the evidence is than 60 days counted from the notice of the denial of the
insufficient to justify the decision or final order, or that motion.
the decision or final order is contrary to law.
If the motion for reconsideration is denied, the movant
Costs
has a fresh period of 15 days from receipt or notice Generally, costs are awarded to the prevailing party, but
of the order denying or dismissing the motion for the court may, for special reasons adjudge that either
reconsideration within which to file a notice of appeal. party pays the costs, or that the same be divided equitably.
Attorney’s fees and expenses of litigation, other than
Petition for Relief
judicial costs, are not recoverable in the absence of
When a judgment or final order is entered, or any other stipulation, except in specific cases enumerated in the
proceeding is thereafter taken against a party in any court Civil Code.
through fraud, accident, mistake, or excusable negligence,
he may file a petition in such court and in the same case Appeals
praying that the judgment, order or proceeding be set
Appeals from first level courts can only be taken to the
aside.
proper Regional Trial Courts, i.e., the Regional Trial Court
When a judgment or final order is rendered by any court which has territorial jurisdiction over the first level court
in a case, and a party thereto, by fraud, accident, mistake, that rendered the decision. The appeal is a matter of right
or excusable negligence, has been prevented from taking and made by filing a Notice of Appeal within 15 days after
an appeal, he may file a petition in such court and in the notice to the appellant of the judgment or final order
same case praying that the appeal be given due course. appealed from. Where a record on appeal is required,
the appellant shall file a notice of appeal and a record
The Petition shall be filed within 60 days after the on appeal within 30 days after notice of the judgment or
petitioner learns of the judgment, final order, or other final order.
proceeding to be set aside, and not more than 6 months
after such judgment or final order was entered. The mode of appeal from decisions rendered by the
Regional Trial Court depends on several factors (i.e.,
Petition for Certiorari, Prohibition and/or Mandamus whether the judgment was rendered in its original or
When any tribunal, board or officer exercising judicial or appellate jurisdiction and whether the appeal involves
quasi-judicial functions has acted without or in excess of questions of fact and/or law).
its or his jurisdiction, or with grave abuse of discretion When the Regional Trial Court renders a decision in the
amounting to lack or excess of jurisdiction, a person exercise of its original jurisdiction, the appeal normally
aggrieved may file a verified petition for the annulment goes to the Court of Appeals. The appeal is a matter of
or modification of the proceedings of such tribunal, right when questions of fact, or mixed questions of fact
board or officer. and law are raised. The appeal is made by the filing of a
When the proceedings of any tribunal, corporation, notice of appeal with the Regional Trial Court within 15
board, officer or person, whether exercising judicial, days from notice of the judgment or final order appealed
quasi-judicial or ministerial functions, are without or in from. In the event that a losing party files a motion for
excess of its or his jurisdiction, or with grave abuse of new trial or reconsideration within the 15-day period for
discretion amounting to lack or excess of jurisdiction, a filing of appeal, the said party has 15 days from receipt
person aggrieved may file a verified petition to require or notice of a denial of the motion within which to file a
notice of appeal. A motion for extension of time to file

DOING BUSINESS IN THE PHILIPPINES 77


a motion for new trial or reconsideration is not allowed. and can be enforced pending appeal unless the following
requisites have been complied with: [i] an appeal has been
When the judgment to be appealed is rendered by
perfected; [ii] defendant posts a sufficient supersedeas
the Regional Trial Court in the exercise of its appellate
bond approved by the first level court; and [iii] deposits
jurisdiction, appeal is not a matter of right, regardless of
with the appellate court the amount of rent due from
whether only questions of law, of fact, or mixed questions
time to time.
of fact and law, are involved. It will be given due course
by the Court of Appeals only when the petition shows A final and executory judgment or order may be executed
prima facie that the lower court has committed errors in on motion within 5 years from the date of its entry.
its conclusions of fact or law that will warrant reversal or After the lapse of such time, and before it is barred by
modification of the decision sought to be reviewed. The the statute of limitations, a judgment may be enforced
method of appeal is by petition for review which should by action. The revived judgment may also be enforced
be filed and served within 15 days from notice of the by motion within 5 years from the date of its entry and
decision sought to be reviewed. Upon proper motion thereafter by action before it is barred by the statute of
and the payment of the full amount of fees before the limitations.
expiration of the initial period, the Court of Appeals may
If a judgment debtor does not comply with the judgment
grant an additional period of 15 days only within which to
upon demand, judgments may be enforced as follows:
file the petition for review. No further extension will be
granted except for the most compelling reason and in no • Satisfaction by levy, by seizure of sufficient property
case to exceed 15 days. of the judgment debtor;
When the judgment to be appealed is rendered by the • Garnishment of debts and credits;
Regional Trial Court in the exercise of its original (not
appellate) jurisdiction, and the appellant intends to raise • Where a judgment directs a party to perform a
only pure questions of law, the appeal from the Regional specific act, a direction from the court that the act be
Trial Court may be taken directly to the Supreme Court, done at the cost of the disobedient party;
by petition for review on certiorari. The appeal, in this • Where a judgment is for the sale of real or personal
instance, is not a matter of right but subject to the property, a direction to a sheriff of the court to sell
discretion of the Supreme Court. The petition must such property and apply the proceeds;
be filed within 15 days from notice of the judgment or
final order appealed from. On motion duly filed and • Delivery or restitution of real property;
served, with full payment of fees before the expiration • Removal of improvements on property subject to
of the reglementary period, the Supreme Court may, for execution through a special order of the court.
justifiable reasons, grant an extension of 30 days only
within which to file the petition. Recognition and Enforcement
Appeals from the Court of Appeals are taken to the of Foreign Judgments
Supreme Court by petition for review on certiorari, the
appeal being discretionary and generally limited to A judgment of another State may not be directly enforced
questions of law. The petition must be filed within 15 in the Philippines. A separate action must be filed in the
days from notice of the judgment or final order appealed Philippines for the foreign judgment to be recognized or
from. On motion duly filed and served, with full payment enforced. The Philippine courts must be convinced that
of fees before the expiration of the reglementary period, there has been opportunity for a full and fair trial abroad
the Supreme Court may for justifiable reasons grant an before a court of competent jurisdiction. Moreover, a
extension of 30 days only within which to file the petition. foreign judgment will not be enforced or recognized
when it runs counter to laws which have for their object
Enforcement of Judgments public order, public policy and good customs.

Execution will issue as a matter of right on motion, upon In case of a judgment in actions affecting title to or
the expiration of the period to appeal. If the appeal has possession of real property or any interest therein, , the
been duly perfected and finally resolved, execution may judgment is conclusive upon the title to the property..
be applied for in the court of origin on motion. However, in the case of a judgment in personal actions
(e.g. actions against a person for his personal liability),
By way of exception, the prevailing party may file a motion the judgment is merely presumptive evidence of a right
for execution of a judgment or final order that has been as between the parties and their successors in interest
appealed. Discretionary execution may only issue upon by a subsequent title. In either case, the judgment may
good reasons to be stated in the order after due notice be repelled by evidence of want of jurisdiction, want of
and hearing. notice to the party, collusion, fraud, or clear mistake of
Judgments in actions for injunction, receivership, law or fact.
accounting and support are immediately executory and Comity and reciprocity are also factors to be considered in
are not stayed by appeal, unless otherwise ordered by the the recognition and enforcement of a foreign judgment
trial court. Moreover, a decision by a first level court (e.g. by a Philippine court.14
Municipal Trial Courts, Metropolitan Trial Courts) against
the defendant in an action for ejectment is executory 14 Marcos, Jr. v. Republic of the Philippines, G.R. No. 189434, 12 March 2014.

78 DOING BUSINESS IN THE PHILIPPINES


Arbitration
Parties have the option to resort to arbitration in resolving may harbor reservations about the neutrality of a “home
their disputes in the Philippines. court” judge. Since the parties are given a free hand in
choosing their arbitrator(s), the outcome becomes more
All types of commercial disputes may be referred to
acceptable.
arbitration. The word “commercial” is broadly defined as
“matters arising from all relationships of a commercial On the part of the arbitrators, they have an added
nature, whether contractual or not.” incentive to establish and build a reputation for
competence and integrity. The greater their reputation
Moreover, Executive Order No. 78, series of 2012 and
for competence and integrity, the higher will be the
its Implementing rules and Regulations mandate the
demand for their services.
inclusion of provisions on the use of alternative dispute
resolution mechanisms in all government contracts Finality of the Award
involving Public-Private Partnership (PPP) projects, Build-
Awards in commercial arbitration are generally not
Operate and Transfer (BOT) projects, Joint Venture
appealable. The grounds to question an arbitral award are
Agreements (JVA) between the Philippine Government
limited as compared to judicial decisions.
and private entities, and contracts entered into by Local
Government Units (LGU). Arbitrators with expertise
The following disputes may not be submitted to Parties are usually able to appoint arbitrators who are
commercial arbitration: (a) labor disputes covered by knowledgeable in the subject matter of the dispute.
Presidential Decree No. 442 (PD 442), otherwise known
as the Labor Code of the Philippines, as amended, and its Confidentiality
Implementing Rules and Regulations; (b) the civil status of Whereas court proceedings are open to the public,
persons; (c) the validity of a marriage; (d) any ground for arbitration proceedings are private and confidential.
legal separation (of married persons); (e) the jurisdiction Documents and information disclosed in arbitration
of courts; (f) future legitime; (g) criminal liability; and (h) proceedings are generally confidential and may be
those disputes which by law cannot be compromised. disclosed to third parties only under exceptional
circumstances.
Advantages of Arbitration
Compared with Court Litigation Arbitration as a Contract
Arbitration, which is steadily growing in popularity as An agreement to arbitrate is a contract, the relation of
an alternative mode of dispute resolution, may be more the parties is contractual, and the rights and liabilities
attractive than court litigation for several reasons. of the parties are controlled by the law of contracts. As
a general rule, there can be no arbitration unless the
Speed parties agree to submit their dispute to arbitration. If
Despite the efforts of the Supreme Court to streamline there is no agreement to submit a dispute to arbitration,
the judiciary, the dockets of Philippine courts remain the remedy of the aggrieved party is to file a case in
clogged. Consequently, it usually takes several years for court. An aggrieved party cannot compel the other party
the trial courts to hear and resolve cases filed with them. to arbitrate. When there is an agreement to arbitrate,
the same can take effect only between the parties, their
In contrast, disputes submitted to arbitration are more assigns and heirs. Thus, as a general rule, a corporation’s
speedily resolved. Unlike judges, arbitrators do not have representative who did not personally bind himself to an
to contend with heavy caseloads. The parties may choose arbitration agreement cannot be forced to participate in
arbitrators whose schedules can accommodate the long arbitration proceedings made pursuant to an agreement
hours necessary to hear and decide a case. entered into by the corporation15. However, corporate
Flexibility of the Rules representatives may be compelled to submit to arbitration
proceedings pursuant to a contract entered into by the
Foreign investors who are not familiar with local court corporation they represent if there are allegations of bad
procedures may prefer a more neutral process. Arbitration faith or malice in their acts representing the corporation
allows the parties to choose or craft the rules that will in order to determine if the distinction between the
govern the arbitration proceedings. Since the procedure personality of the corporation and the personalities of its
is mutually agreed upon, the parties have more faith in representatives should be disregarded.16
the integrity of the process. Also, the parties need not be
bound by the strict rules of evidence. Philippine Law recognizes the principle of separability
of arbitration contracts. An arbitration agreement that
Choice of Arbitrators forms part of the main contract shall not be regarded
as invalid or non-existent just because the main contract
The parties are free to choose the arbitrators. They
is invalid or did not come into existence, since the
are expected to appoint arbitrators whom they regard
arbitration agreement shall be treated as a separate
as honest and competent. The ability to choose the
agreement independent of the main contract.17 In PEZA
arbitrator(s) is especially attractive to a foreign party who

DOING BUSINESS IN THE PHILIPPINES 79


v. Edison (Bataan) Cogeneration Corporation,18, the original and exclusive jurisdiction over disputes arising
Supreme Court further held that “the invalidity of the from, or connected with, contracts entered into by
main contract, also referred to as the ‘container’ contract, parties involved in construction in the Philippines and all
does not affect the validity of the arbitration agreement.” that is needed for the CIAC to acquire jurisdiction is for
the parties to agree to submit the same to arbitration.
The parties may agree to submit a dispute to arbitration
either before or after a dispute arises. The Philippine Supreme Court has held that “as long as
the parties agree to submit their dispute to voluntary
The right to refer a dispute to arbitration can be waived
arbitration, regardless of what forum they may choose,
by estoppel19
their agreement will fall within the jurisdiction of the
CIAC, such that, even if they specifically choose another
Arbitration Law forum, the parties will not be precluded from electing to
The following laws govern arbitration in the Philippines: submit their dispute before the CIAC because this right
Republic Act No. 876 (known as the Arbitration Law), has been vested by law.”21
Republic Act No. 9285 (known as the Alternative Dispute
In Ibex International, Inc. v. GSIS, et. al.,22 the Supreme Court
Resolution Act of 2004 or ADR Act), Implementing Rules
held that: “The CIAC is the duly constituted quasi-judicial
and Regulations of the ADR Act (ADR Act IRR), Executive
agency accorded with jurisdiction to resolve disputes
Order No. 1008 (known as Construction Industry
arising from construction contracts in the Philippines.
Arbitration Law), and the Special Rules of Court on
This Court must confer finality to its factual findings as
Alternative Dispute Resolution (Special ADR Rules).
they are supported by evidence.”
International Arbitration
On average, proceedings in the CIAC take around six
International commercial arbitrations seated20 in months.
the Philippines are governed by the Model Law on
International Commercial Arbitration adopted by the Role of the Courts in Arbitration
United Nations Commission on International Trade Law
The Special ADR Rules define the role of the courts in
on 21 June 1985 (United Nations Document A/40/17).
relation to arbitration proceedings, including: challenge
Arbitration is considered international if: to the existence, validity and enforceability of arbitration
agreements; referral to arbitration; interim measures of
A. the parties to an arbitration agreement have, at the protection; appointment, challenge and termination of
time of the conclusion of such agreement, their places of arbitrators; assistance in taking evidence; confidentiality/
business in different countries; or protective orders; confirmation, correction or vacation
B. one of the following places is situated outside the of awards in domestic arbitration; recognition and
State in which the parties have their places of business: enforcement or setting aside of international commercial
arbitration awards; recognition and enforcement of
i. the place of arbitration determined in or pursuant foreign arbitral awards; and appeals to the Court of
to the arbitration agreement; or Appeals and the Supreme Court. The Special ADR Rules
ii. any place where a substantial part of the obligations reiterate the State policy of promoting arbitration.
of the commercial relationship is to be performed
or the place with which the subject matter of the
dispute is most closely connected; or
C. the parties have expressly agreed that the subject
matter of the arbitration agreement relates to more than 15 (See Aboitiz Transport System v. Carlos A. Gothong Lines, G.R. No. 198226,
one country. 18 July 2014.)

16 (Lanuza v. BF Corporation, G.R. No. 174938, 1 October 2014.)


Domestic Arbitration
17 (Cargill Philippines, Inc. v. San Fernando regala Trading, Inc. G.R. No. 175404,
The Arbitration Law, as amended by the ADR Act, applies 31 January 2011.)
to domestic arbitrations. Domestic arbitration is simply 18 G.R. No. 179537, 23 October 2009.
defined as arbitration that is not international. Thus, if 19 (Benguet Corporation v. Department of Environment and Natural Resources -
the dispute is between parties who have their place of Mines Adjudication Board, et. al., G.R. No. 163101, 13 February 2008.)
business in the Philippines, the place of arbitration is the 20 These are the instances when the Philippines is chosen as the place or seat
Philippines, their obligations are to be performed in the of arbitration. The place or seat of arbitration is the legal or juridical home (or
Philippines, and there is no stipulation in the arbitration domicile) of the arbitration, the choice of which results in a number of highly
significant legal consequences as it determines the (a) the national arbitration
agreement that the subject matter of the arbitration legislation applicable to the arbitration; (b) the law applicable to the “external”
agreement relates to another country, the arbitration will relationship between the arbitration and national law and courts (including
annulment of awards and selection and removal of arbitrators); (c) the law
be considered domestic. applicable to the “internal” procedures of the arbitration (including requirements
for equality of treatment and due process); and (d) the law presumptively
Construction Arbitration applicable to the substantive validity of the arbitration agreement. GARY B.
BORN, INTERNATIONAL COMMERCIAL ARBITRATION, (2014), 2051)
The arbitration of construction disputes is governed
21 National Irrigation Administration v. Court of Appeals, G.R. No. 129169, 17
by the Constitution Industry Arbitration Law. The November 1999.
Construction Industry Arbitration Commission (CIAC) has
22 G.R. No. 162095, 12 October 2009.

80 DOING BUSINESS IN THE PHILIPPINES


Arbitral Institutions in international arbitrations:

Several arbitral institutions have been established in the • A party to the arbitration agreement was under
Philippines, similar to those of the International Chamber some incapacity, or the said agreement is not valid
of Commerce, Hong Kong International Arbitration under the law to which the parties have subjected
Center, and the Singapore International Arbitration it or, failing any indication thereof, under Philippine
Center. The leading commercial arbitration center in the law;
Philippines is the Philippine Dispute Resolution Center, • The party making the application to set aside or
Inc. (PDRCI). resist enforcement was not given proper notice of
The PDRCI is a non-stock, non-profit organization the appointment of an arbitrator or of the arbitral
incorporated in 1996 out of the Arbitration Committee of proceedings or was otherwise unable to present his
the Philippine Chamber of Commerce and Industry. It was or her case;
formed for the purpose of promoting and encouraging • The award deals with a dispute not contemplated
the use of arbitration as an alternative mode of settling by or not falling within the terms of the submission
commercial transaction disputes and providing dispute to arbitration, or contains decisions on matters
resolution services to the business community. PDRCI’s beyond the scope of the submission to arbitration;
membership includes prominent lawyers and members provided that, if the decisions on matters submitted
of the judiciary, academicians, arbitrators, bankers, to arbitration can be separated from those not so
accountants, engineers, architects and businessmen. submitted, only that part of the award which contains
It takes the PDRCI an average of around 1 year from the decisions on matters not submitted to arbitration
time of filing of the request for arbitration to hear the may be set aside or only that part of the award
case and render an award. which contains decisions on matters submitted to
arbitration may be enforced;
To reflect recent trends in international commercial
arbitration, and in order to keep pace with other arbitral • The composition of the arbitral tribunal or the
institutions, the PDRCI recently approved its revised Rules arbitral procedure was not in accordance with the
of Arbitration and Guidelines on Fees, which became agreement of the parties, unless such agreement
effective on January 2015. The revised rules contain new was in conflict with a provision of Philippine law from
provisions on joinder of additional parties, consolidation which the parties cannot derogate, or, failing such
of arbitrations, appointment of emergency arbitrator and agreement, was not in accordance with Philippine
expedited procedure, among others. law;
• The subject-matter of the dispute is not capable
Ad Hoc Arbitration of settlement by arbitration under the law of the
There is no prohibition in the Philippines regarding the Philippines;
conduct of ad hoc arbitrations in accordance with the • The recognition or enforcement of the award would
existing policy in favor of arbitration. be contrary to public policy.
Enforcement of Awards An additional ground for opposing recognition/
enforcement is that “the award has not yet become
The Philippines is a party to the New York Convention binding on the parties or has been set aside or suspended
on the Recognition and Enforcement of Foreign Arbitral by a court of the country in which that award was made.”
Awards 1958. An action for the recognition and/or
enforcement of a foreign arbitral award must be filed with Domestic arbitral awards may be vacated on the following
the proper Regional Trial Court and a copy of the award grounds:
and the original agreement must likewise be submitted.
• The arbitral award was procured with through
If the said award or agreement is not made in an official
corruption, fraud or other undue means;
language of the Philippines, the party-applicant shall
produce a translation of the documents into the official • There was evident partiality or corruption in the
language. The translation shall be certified by an official arbitral tribunal or any of its members;
or sworn translator or by a diplomatic or consular agent.
• The arbitral tribunal was guilty of misconduct or any
The Special ADR Rules provide rules for the confirmation form of misbehavior that has materially prejudiced
of awards in domestic arbitration, and the recognition/ the rights of any party such as refusing to postpone
enforcement of international commercial arbitration a hearing upon sufficient cause shown or to hear
awards and foreign arbitral awards. evidence pertinent and material to the controversy;

Challenging Awards • One or more of the arbitrators was disqualified to


act as such under the law and willfully refrained from
The grounds to set aside arbitral awards are limited. disclosing such disqualification;
Generally, awards may only be challenged on the basis
of due process and procedural grounds and not on • The arbitral tribunal exceeded its powers, or so
questions of facts or law affecting the merits of the imperfectly executed them, such that a complete,
award. The following are the grounds to challenge awards final and definite award upon the subject matter

DOING BUSINESS IN THE PHILIPPINES 81


submitted to them was not made;
• The arbitration agreement did not exist, or is invalid
for any ground for the revocation of a contract or is
otherwise unenforceable; or
• A party to arbitration is a minor or a person judicially
declared to be incompetent.

Other Modes of Alternative Dispute Resolution (ADR)


There have been increased efforts in recent years to • all cases under the Violence Against Women and
institutionalize ADR in the Philippine legal system to aid Children Act, and
in the speedy administration of justice.
• cases with pending applications for restraining
Court-Annexed ADR orders or preliminary injunctions.

Court-Annexed Mediation The court before which a case was filed involving any
of the aforementioned disputes calls the parties to a
Beginning in 2001, the Supreme Court, in the exercise conference before a mediator appointed by the trial court
of its supervisory and regulatory powers over the from the list provided by the Supreme Court. During the
Philippine judicial system, implemented, initially on a trial mediation period, the court orders the suspension of
basis, the requirement for the conduct of mediation for the proceedings before it for 30 days. Individual parties
certain cases commenced before the courts. In 2011, the are required to personally appear for mediation unless
Supreme Court expanded the cases covered by the Court- they send a representative who is fully authorized to
Annexed Mediation scheme (CAM). The following cases appear, negotiate and enter into a compromise, through
are currently covered by the rule on CAM: a Special Power of Attorney. Corporations, partnerships
or other juridical entities shall be represented by a
• all civil cases and the civil liability of criminal cases
ranking corporate officer fully authorized by a Board
covered by the Rules on Summary Procedure,
Resolution to offer, negotiate, accept, decide and enter
including civil liability for violation of the Bouncing
into a compromise agreement, without need of further
Checks Law;
approval by or notification to the authorizing party.
• special proceedings for the settlement of estates;
If a settlement is reached, the compromise agreement
• all civil and criminal cases requiring a certificate to file entered into between the parties is submitted to the
action under the Revised Katarungang Pambarangay court and serves as basis for the rendition of a judgment
Law; by compromise that may be enforced by execution.
Otherwise, the case is returned to the court.
• the civil aspect of quasi-offenses under the Revised
Penal Code; Any and all matters discussed or communications
made and documents presented during the mediation
• the civil aspect of less grave felonies not exceeding 6 proceedings are privileged and confidential and
years of imprisonment where the offended party is a inadmissible as evidence for any purpose in any other
private person; proceedings.
• civil aspects of estafa (swindling), theft and libel; The period during which the case is undergoing mediation
• all civil cases and probate proceedings brought on or conciliation are excluded from the regular and
appeal from the first-level courts; mandatory periods for trial and rendition of judgment
in ordinary cases as well as in cases under summary
• all cases of forcible entry and unlawful detainer procedure.
brought on appeal from the first-level courts;
Judicial Dispute Resolution
• all civil cases involving title or possession of real
property or interest therein brought on appeal from Judicial Dispute Resolution (JDR) is governed by A.M.
first-level courts; and No. 11-1-6-SC-PHILJA and is promulgated pursuant to the
ADR Act. Together with Court-Annexed Mediation, JDR
• habeas corpus cases brought up on appeal from the is intended to put an end to pending litigation through
first-level courts. a compromise agreement and help unclog court dockets
The following cases are not proper subject of CAM: in the country. Cases covered by CAM are also subject to
JDR.
• civil cases which by law cannot be compromised,
Judicial proceedings covered by JDR are divided into two
• other criminal cases not covered by numbers 3 to 6 stages: (1) from the filing of the complaint to the conduct
above, of Court-Annexed Mediation and JDR, and (2) pre-trial
• habeas corpus petitions, proper to trial and judgment. The judge to whom the case
had been originally assigned is referred as the JDR judge,

82 DOING BUSINESS IN THE PHILIPPINES


who presides over the first stage. Another judge, called in reaching a voluntary agreement regarding a dispute.
the trial judge, presides over the second stage. At the Information obtained through mediation is privileged
initial stage of the preliminary conference, the JDR judge and confidential. A party, a mediator, or a non-party
briefs the parties on Court-Annexed Mediation and JDR. participant may refuse to disclose and may prevent any
Upon failing to secure a settlement of the dispute during other person from disclosing a mediation communication.
Court-Annexed Mediation, a second attempt to arrive at
A mediated settlement agreement may be deposited
a compromise agreement is made through JDR. The JDR
with the appropriate clerk of a Regional Trial Court of the
judge facilitates the settlement discussions between the
place where one of the parties resides. Where there is a
parties and tries to reconcile their differences, assesses
need to enforce the settlement agreement, a petition
the relative strengths and weaknesses of each party’s
may be filed by any of the parties with the same court.
case, and makes a non-binding and impartial evaluation
Pursuant to the Special ADR Rules, after a summary
of the chances of each party’s success in the case. On
hearing, if the court finds that the agreement is a valid
the basis of this neutral evaluation, the judge seeks to
mediated settlement agreement, that there is no merit
persuade the parties to a fair and mutually acceptable
in any of the affirmative or negative defenses raised, and
settlement of their dispute. The JDR judge may not
the respondent has breached that agreement, in whole
preside over the trial of the case if the parties do not
or in part, the court shall order the enforcement thereof;
settle their dispute at JDR.
otherwise, it shall dismiss the petition.
To complete the JDR process, judges of the first level
The parties may agree in the settlement agreement
courts shall have a period of not exceeding thirty (30)
that the mediator shall become a sole arbitrator for the
days, while judges of the second level courts shall have a
dispute and shall treat the settlement agreement as an
period of not exceeding sixty (60) days. A longer period,
arbitral award which shall be subject to enforcement.
however, may be granted upon the discretion of the JDR
judge if there is a high probability of settlement and upon Early Neutral Evaluation
joint written motion of the parties. Both periods shall be
computed from the date when the parties first appeared Early neutral evaluation is an ADR process wherein parties
for JDR proceedings as directed in the respective Orders and their lawyers are brought together early in the pre-
issued by the judge. trial phase to present summaries of their cases and to
receive a non-binding assessment by an experienced
If full settlement of the dispute is reached within 30 days neutral person, with expertise in the subject matter or
(in the first level court) or 60 days (in the second level substance of the dispute.
court), the parties, assisted by their respective counsels,
shall draft a compromise agreement which shall be All papers and written presentations communicated to
submitted to the court for a judgment upon compromise, the neutral third person, including any paper prepared by
enforceable by execution. Only upon failure of the JDR a party to be communicated to the neutral third person
will parties proceed to trial proper, when the case is or to the other party as part of the dispute resolution
turned over to the trial judge. process, and the neutral third person’s written non-
binding assessment or evaluation, shall be treated as
Any and all matters discussed or communications made, confidential.
including requests for mediation, and documents
presented during the JDR proceedings before the trial The proceedings are governed by the rules and procedure
judge, are privileged and confidential and inadmissible agreed upon by the parties. By default, the ADR Act IRR
as evidence for any purpose in any other proceedings. shall govern.
Further, the JDR judge may not pass any information Mediation-Arbitration or Med-Arb
obtained in the course of conciliation and early neutral
evaluation to the trial judge or to any other person. Med-Arb is a two-step dispute resolution process
involving mediation and then followed by arbitration. It
Philippine Mediation Center - Appeals Court Mediation is governed by the rules and procedure agreed upon by
At the Court of Appeals level, cases covered by Court- the parties. Otherwise, the ADR Act IRR shall govern. As
Annexed Mediation and JDR, which have not been settled a general rule, a mediator may not act as an arbitrator in
and went to trial, must be referred to the Philippine respect of the same dispute, or vice-versa.
Mediation Center - Appeals Court Mediation unit for Mini-trial
mediation.
Mini-trial is a structured dispute resolution method in
Commercial ADR which the merits of a case are argued before a panel
comprising of senior decision-makers, with or without
The ADR Act, without limiting the modes of ADR that the the assistance of a neutral third person, before which the
parties can avail of, provide for, in addition to arbitration, parties seek a negotiated settlement. It shall be governed
the following modes of ADR: by the rules and procedure agreed upon by the parties.
Mediation Otherwise, the ADR Act IRR shall govern.

Mediation is a voluntary process in which a mediator,


selected by the disputing parties, facilitates
communication and negotiation, and assists the parties

DOING BUSINESS IN THE PHILIPPINES 83


17
INSOLVENCY IN
THE PHILIPPINES

Insolvency laws in the Philippines do not provide


for any special rule, regulation, treatment and/
or circumstance applicable only to European
Corporations. Insolvency laws apply the same
way to European Corporations, as other domestic
or foreign corporations.
Overview and Introduction to the Jurisdiction/
Applicable Legislation
There are three types of remedies available to a financially the procedure governing liquidation proceedings of
distressed individual or juridical person: suspension insolvent juridical and individual debtors and suspension
of payments (only available to individuals), corporate of payments of insolvent individual debtors under the
rehabilitation (voluntary / involuntary, pre-negotiated, or FRIA. On 21 June 2016, the Supreme Court expanded
out-of-court or informal restructuring agreements) and the coverage of the current Special Commercial Courts to
liquidation. The applicable laws and regulations are the include cases governed by the FRIA26. On 5 October 2016,
Civil Code of the Philippines (Civil Code), the Financial the Supreme Court also issued the schedule of legal fees
Rehabilitation and Insolvency Act (FRIA), Presidential for proceedings under the FRIA27.
Decree No. 902-A (PD 902-A)23, the Financial Rehabilitation
If what is sought is merely a little financial breathing space,
Rules of Procedure (Financial Rehabilitation Rules)24,
then the remedy is suspension of payments (available to
and the Financial Liquidation and Suspension of Payments
individual debtors), which provides for the deferment
Rules for Procedure for Insolvent Debtors (FLSP Rules25).
of payments and temporary protection against actions/
The type of proceeding that applies to a debtor depends
executions by unsecured creditors.
on the particular relief sought.
If, on the other hand, a company would need to undergo
The FRIA became effective on 31 August 2010. It provides
rehabilitation which would of a company entail more
for a more comprehensive framework for rehabilitation
radical measures such as changes in organization,
and liquidation of debtors. More importantly, the FRIA has
management and/or strategy, and requires temporary
made available to partnerships and sole proprietorships,
protection against both secured and unsecured creditors,
the benefits of rehabilitation proceedings. This is
then the remedy is to seek corporate rehabilitation.
advantageous for small businesses as they are more
Finally, if the debtor company has become insolvent
commonly formed as partnerships or individual
and incapable of being rehabilitated, it may apply for
enterprises. Banks, insurance companies and pre-need
liquidation and have its assets distributed accordingly
companies, and national and local government agencies
among its creditors. In all cases under the FRIA, the
or units, however, are not covered under the FRIA.
debtor shall be insolvent or is generally unable to pay its
On 27 August 2013, the Supreme Court promulgated or his liabilities as they fall due in the ordinary course of
the Financial Rehabilitation Rules which provides for business or has liabilities that are greater than its or his
the procedure governing rehabilitation proceedings assets.
under the FRIA. On 21 April 2015, the Supreme Court
Each of these remedies is discussed in more detail below.
also promulgated the FLSP Rules which provides for

Suspension of Payment and Rehabilitation


Suspension of Payments Action on the Petition for Suspension of Payments

An individual debtor who possesses sufficient property to If the Court finds the petition for Suspension of Payments
cover all of his or her debts, but foresees the impossibility sufficient in form and substance, it will issue an Order:
of meeting them when they respectively fall due, may i. calling a meeting of all the creditors named in
file a petition with a Philippine Regional Trial Court the schedule of debts and liabilities (Creditors’
(the Court) to be declared in a state of suspension of Meeting);
payments. The petition must be filed with the Court of
the place where the individual debtor has resided at least ii. directing such creditors to prepare and present
six months prior to the filing of the petition. written evidence of their claims before the
Creditors’ Meeting;

23 After the promulgation of Republic Act 8799 or the Securities Regulation 24 Supreme Court Administrative Matter No 12-12-11
Code, jurisdiction over petitions of corporations, partnerships or associations to
be declared in the state of suspension of payments was transferred from the SEC 25 Supreme Court Administrative Matter No. 15-04-06-SC
to the Regional Trial Court. The SEC, however, retained jurisdiction over pending
26 Supreme Court Administrative Matter No. 03-03-03-SC
suspension of payments and rehabilitation cases filed as of 30 June 2000 until
final disposition of such cases. 27 Supreme Court Administrative Matter No. 04-04-04-SC

DOING BUSINESS IN THE PHILIPPINES 85


iii. directing the publication of the said Order in a Agreement for Suspension of Payments
newspaper of general circulation;
The petition for suspension of payments must include a
iv. directing the clerk of court to cause the sending of statement of the individual debtor’s assets and liabilities,
a copy of the Order to all creditors named in the and the individual debtor’s proposed agreement with the
schedule of debts and liabilities; creditors for the suspension of payments. The presence
of creditors holding claims amounting to at least three-
v. forbidding the individual debtor from selling,
fifths (3/5) of the liabilities is necessary for holding a
transferring, encumbering or disposing of in any
Creditors’ Meeting. The proposed agreement must be
manner his or her property, except those used in the
approved by two-thirds (2/3) of the creditors representing
ordinary operations of commerce or of industry in
at least three-fifths (3/5) of the individual debtor’s total
which the petitioning individual debtor is engaged
liabilities. The proposed agreement will be deemed
so long as the proceedings relative to the suspension
rejected if the number of creditors required for holding
of payments are pending;
a Creditors’ Meeting is not attained, or if the required
vi. prohibiting the individual debtor from making any vote is not achieved. In such instances, the proceeding
payment outside of the necessary or legitimate will be terminated and the creditors may enforce their
expenses of his or her business or industry, so long respective credits.
as the proceedings relative to the suspension of
If the required vote is achieved without any objection
payments are pending; and
from the creditors, or the decision of the majority of
vii. appointing a commissioner to preside over the the creditors to approve the proposed agreement or
Creditors’ Meeting. any amendment thereof made during the Creditors’
Meeting is upheld by the Court, the latter will issue an
Actions Suspended order that the proposed agreement be carried out, and
Upon motion filed by the individual debtor, the Court may such agreement shall be binding on all creditors that have
issue an order suspending any pending execution against been properly summoned and included in the schedule of
the individual debtor, provided that properties held as debts and liabilities. However, the agreement will not be
security by secured creditors will not be the subject of binding upon those creditors mentioned in 2.1.b (i) and
such suspension order. (ii) above.

A creditor may not sue or institute proceedings to collect If the required vote is achieved but there is an objection
his or her claim from the individual debtor from the time from any of the creditors, the Court will conduct a
of the filing of the petition for suspension of payments hearing on the objection. If the objection is found to
and for as long as proceedings remain pending except: be meritorious, the proceeding will terminate. If the
objection is found to be unmeritorious, the Court will
1. creditors having claims for personal labor, proceed as though no objection has been made.
maintenance, expense of last illness and funeral of
the wife or children of the individual debtor incurred The amount of the debts of the individual debtor is not
in the sixty (60) days immediately prior to the filing of affected by a suspension of payments. However, the
the petition; and payment for such debts is delayed.

2. secured creditors. Objections to the Debtor’s Proposed Agreement


The possible grounds for objecting to the proposed
agreement are:
1. defects in the call for the meeting of the creditors, in
the holding thereof, and in the deliberations thereat,
which prejudice the rights of the creditors;
2. fraudulent connivance between one or more
creditors and the individual debtor to vote in favor of
the proposed agreement; and
3. fraudulent conveyance of claims for the purpose of
obtaining the required majority.
If the individual debtor fails wholly or in part to perform
the Court-approved agreement, the rights which the
creditors had against the individual debtor before
the agreement shall re-vest in them. In such case the
individual debtor may be made subject to the insolvency
proceedings in the manner established by the FRIA.

28 Under the FRIA, the commencement date refers to the date on which the court
issues the commencement order, which shall be retroactive to the date of filing of
the petition for voluntary/involuntary proceedings.

86 DOING BUSINESS IN THE PHILIPPINES


Court-Supervised Rehabilitation F. The ability of the debtor’s directors or officers to
dispose of the debtor’s assets is restricted. Directors or
Some of the salient provisions of the FRIA on court- officers may be held liable for double the value of the
supervised rehabilitation are as follows: property involved if having notice of the commencement
A. Under the FRIA, obligations incurred after the of the proceedings under the FRIA, or having reason to
commencement date28 to finance the rehabilitation of believe that proceedings are about to be commenced,
the debtor are considered administrative expenses. Thus, or in contemplation of the proceedings, willfully: (a)
these obligations can be paid in the ordinary course of dispose or cause to be disposed of any property of the
business during the rehabilitation period and enjoy priority debtor other than in the ordinary course of business or
in preference of credits. This provision improves creditor authorize or approve any transaction in fraud of creditors
rights for creditors coming in during rehabilitation. or in a manner grossly disadvantageous to the debtor
By way of comparison, under the Rules on Corporate and/or creditors; or (b) conceal or authorize or approve
Rehabilitation, a Stay Order directs the payment of new the concealment, from the creditors, or embezzles
loans or other forms of credit accommodations obtained or misappropriates, any property of the debtor. The
for the rehabilitation of the debtor only with prior court liability of the director or officer shall be determined by
approval. considering the amount of shareholding or equity interest
of such director or officer, the degree of his control, and
B. The FRIA also provides for a waiver of taxes and fees the extent of his involvement in the actual management
due to the government (national and local) upon issuance of the operations of the corporation.
of the Commencement Order by the court and until
approval of the Rehabilitation Plan or dismissal of the Types of Proceedings
petition whichever is earlier. Voluntary Proceedings
C. The duration of a Stay Order extends from the issuance An insolvent debtor (whether a sole proprietorship,
of the Commencement Order until the termination of partnership or corporation) may initiate voluntary
the proceedings, unlike before where the Stay Order was proceedings by filing a petition for rehabilitation with
effective only until the approval of the Rehabilitation the Philippine Regional Trial Court, which has jurisdiction
Plan. over the principal office of the debtor, as specified in
D. Compensation of employees required to carry on its articles of incorporation or partnership or, in cases
the business shall be considered an administrative of sole proprietorships, in its registration papers with
expense. Claims for salary and separation pay for work the Department of Trade and Industry (DTI). A group of
performed after the commencement date shall also be debtors may also jointly file a petition for rehabilitation
an administrative expense. However, claims of separation when one or more of its members foresee the
pay for months worked prior to the commencement date impossibility of meeting debts when they respectively
shall be considered a pre- commencement claim. fall due, and the financial distress would likely adversely
affect the financial condition and/or operations of the
E. The FRIA provides further clarifications on the other members of the group, and/or the participation of
treatment of contracts. Under the FRIA, unless cancelled the other members of the group is essential under the
by a final judgment of a court of competent jurisdiction terms and conditions of the proposed Rehabilitation Plan.
issued prior to the issuance of the Commencement
Order, or at anytime thereafter by the court before which Involuntary Proceedings
the rehabilitation proceedings are pending, all valid and Any creditor or group of creditors with a claim of, or
subsisting contracts of the debtor with creditors and other the aggregate of whose claims is, at least PHP1 million
third parties as at the commencement date shall continue or at least 25% of the subscribed capital stock or
in force: provided, that within 90 days following the partners’ contributions, whichever is higher, may initiate
issuance of the Commencement Order, the debtor, with involuntary proceedings with the Philippine Regional Trial
the written consent of the rehabilitation receiver, must Court, which has jurisdiction over the principal office of
notify in writing each contractual counter-party whether the debtor, as specified in its articles of incorporation
it is confirming the particular contract. Contractual or partnership or, in cases of sole proprietorships, in its
obligations of the debtor arising or performed during registration papers with the DTI against the debtor by
this period, and afterwards for confirmed contracts, filing a petition for rehabilitation with the court if:
are considered administrative expenses. Contracts
not confirmed within the required deadline shall be 1. there is no genuine issue of fact or law on the claim/s
considered terminated. Claims for actual damages, if of the petitioner/s, and that the due and demandable
any, arising as a result of the election to terminate a payments thereon have not been made for at least 60
contract shall be considered pre-commencement claims days or that the debtor has failed generally to meet its
against the debtor, to be filed with the rehabilitation liabilities as they fall due; or
court as a separate claim. The claim will be considered in 2. a creditor, other than the petitioner/s, has initiated
the rehabilitation plan with the other claims against the foreclosure proceedings against the debtor that will
debtor. The provisions of the FRIA do not prevent the prevent the debtor from paying its debts as they become
cancellation or termination of any contract of the debtor due or will render it insolvent.
for any ground provided by law.

DOING BUSINESS IN THE PHILIPPINES 87


Action on the Petition and Commencement of Effectivity and Duration of Commencement Orders
Proceedings
Unless lifted by the court, or where the rehabilitation plan
If the court finds the petition sufficient in form and is seasonably confirmed or approved, or the rehabilitation
substance, it will, not later than five working days from proceedings are ordered terminated by the court, the
the filing of the petition, issue a “Commencement Order” Commencement Order will be effective for the duration
which, among others: (a) declares that the debtor is under of the rehabilitation proceedings for as long as there is a
rehabilitation; (b) appoints a Rehabilitation Receiver; substantial likelihood that the debtor will be successfully
(c) prohibits the debtor from selling, encumbering, rehabilitated.
transferring or disposing of in any manner any of its
Court Proceedings
properties except in the ordinary course of business;
(d) prohibits the debtor from making any payment of If, after the initial hearing on the petition for rehabilitation,
its liabilities outstanding as at the date of filing of the the court is satisfied that there is merit in the petition, it
petition; (e) prohibits the debtor’s suppliers of goods will give due course to the petition and refer the same to
or services from withholding the supply of goods and the Rehabilitation Receiver.
services in the ordinary course of business for as long as
the debtor makes payments for the services and goods The Rehabilitation Receiver will evaluate the rehabilitation
supplied after the issuance of the Commencement Order; plan and submit his or her recommendations to the Court
(f) authorizes the payment of administrative expenses as within a period of not more than 90 days. However,
they become due; (g) suspends all actions or proceedings, the court may also refer any dispute relating to the
in court or otherwise, for the enforcement of claims Rehabilitation Plan or the rehabilitation proceedings to
against the debtor;29 (h) suspends all actions to enforce arbitration or other modes of dispute resolution.
any judgment, attachment or other provisional remedies If the petition is dismissed because of a finding that: (a)
against the debtor; (i) sets an initial hearing on the debtor is not insolvent; (b) the petition is a sham filing
petition; and (j) directs all creditors and interested parties intended only to delay the enforcement of the rights of
to file their claims at least five days before the said initial the creditor/s or of any group of creditors; (c) the petition,
hearing. the Rehabilitation Plan and the attachments thereto
If, within the same period, the court finds the petition contain any materially false or misleading statements; (d)
deficient in form or substance, it may give the petitioner/s the debtor has committed acts of misrepresentation or
not more than five working days to amend or supplement in fraud of its creditor/s or a group of creditors, the court
the petition. If the deficiency is not cured within the may, in its discretion, order the petitioner to pay damages
extended five-day period, the court must dismiss the to any creditor or to the debtor, as the case may be, who
petition. may have been injured by the filing of the petition, to the
extent of any such injury.
Upon issuance of the Commencement Order and until
approval of the Rehabilitation Plan or dismissal of the The court may also convert the proceedings into one
petition, whichever is earlier, the imposition of all taxes for the liquidation of the debtor upon a finding that: (a)
and fees including penalties, interests and charges thereof the debtor is insolvent; and (b) there is no substantial
due to the national government or to local government likelihood for the debtor to be successfully rehabilitated
units will be considered waived, in furtherance of the as determined in accordance with the rules promulgated
objectives of rehabilitation. by the Supreme Court; and (c) there is failure of
rehabilitation.
The court may also convert the proceedings into
liquidation:
a. upon motion of the debtor (juridical debtor) at any
time during the pendency of court-supervised or pre-
negotiated rehabilitation proceedings;
b. when, one year from the date of filing of the petition
to confirm a rehabilitation plan, no rehabilitation plan is
confirmed within the said period;
c. in cases of termination of proceedings due to failure
of rehabilitation or dismissal of petition for reasons other
than technical grounds; or
d. upon verified motion of three or more creditors whose
aggregate claims total at least one million pesos (PHP1
million) or at least 25% of the subscribed capital or
partners’ contributions of the debtor, whichever is higher.

29 The issuance of a Stay or Suspension Order suspending all actions or proceedings for enforcement of all claims against the debtor, any judgment, attachment or other
provisional remedies against the debtor and prohibits the debtor from selling, encumbering, transferring or disposing of any of its properties except in the ordinary
course of business and from making any payment for its outstanding liabilities as of commencement date does not affect the right to commence actions or proceedings
in order to preserve ad cautelam a claim against the debtor and to toll the running of the prescriptive period to file the claim.

88 DOING BUSINESS IN THE PHILIPPINES


Management of the Juridical Debtor • Any compromise on amounts or rescheduling of
timing of payments by the debtor will be binding on
Unless otherwise ordered by the court upon motion of any
creditors regardless of the successful implementation
interested party, the management of the juridical debtor
of the Rehabilitation Plan.
will remain with the existing management subject to the
applicable laws and agreements, if any, on the election or • Claims arising after approval of the Rehabilitation
appointment of directors, managers or managing partner. Plan that are otherwise not treated by the
However, all disbursements, payments or sale, disposal, Rehabilitation Plan are not subject to any Suspension
assignment, transfer or encumbrance of property, or Order.
any other act affecting title or interest in property, will
Termination of Rehabilitation Proceedings
be subject to the approval of the Rehabilitation Receiver
and/or the court. The rehabilitation proceedings may be terminated upon
motion by an interested party or the rehabilitation
Claw-back Provisions
receiver if: [i] there is a successful implementation
The court may, upon motion and after notice and hearing, of the Rehabilitation Plan; or, [ii] there is a failure of
rescind or declare as null and void any sale, payment, rehabilitation.
transfer or conveyance of the debtor’s unencumbered
There is failure of rehabilitation in the following cases: (a)
property or any encumbering thereof by the debtor or its
dismissal of the petition by the court; (b) the debtor fails
agents or representatives after the commencement date
to submit a Rehabilitation Plan; (c) there is no substantial
which are not in the ordinary course of the business of
likelihood that the debtor can be rehabilitated within
the debtor.
a reasonable period based on the Rehabilitation Plan
The court may also rescind or declare as null and void any submitted by the debtor; (d) the Rehabilitation Plan or
transaction that occurred prior to the commencement its amendment is approved by the court but the debtor
date entered into by the debtor or involving its funds fails to perform its obligations thereunder or there is
or assets, on the ground that the same was executed a failure to realize the objectives, targets or goals set
with intent to defraud a creditor or creditors or which forth therein; (e) the commission of fraud in securing the
constitute undue preference of creditors. approval of the Rehabilitation Plan or its amendment; and
(f) other analogous circumstances.
Rehabilitation Plan
Confirmation of the Rehabilitation Plan Pre-Negotiated Rehabilitation
If no objections to the Rehabilitation Plan are filed within An insolvent debtor, by itself or jointly with any of its
the relevant period or if the objections filed are found creditors, may file a verified petition with the court
by the court to be lacking in merit or have been cured or for the approval of a pre-negotiated Rehabilitation
have been resolved pursuant to an order to cure issued by Plan, supported by an affidavit showing the written
the court, then the court must issue an order confirming endorsement or approval of creditors holding at least
such Rehabilitation Plan. The court may confirm the two-thirds (2/3) of the total liabilities of the debtor,
Rehabilitation Plan notwithstanding the existence of including secured creditors holding more than 50% of
unresolved disputes over claims, if the Rehabilitation Plan the total secured claims of the debtor and unsecured
has made adequate provisions for paying such claims. creditors holding more than 50% of the total unsecured
claims of the debtor.
Effect of Confirmation of the Rehabilitation Plan
• The confirmed Rehabilitation Plan will be binding
upon the debtor and all persons who may be
affected by it, including the creditors, whether or
not they participated in the proceedings, opposed
the Rehabilitation Plan or whether or not their claims
have been included in the schedule.
• The debtor must comply with the provisions of the
Rehabilitation Plan and take all actions necessary to
carry them out.
• Payments will be made to the creditors in accordance
with the provisions of the Rehabilitation Plan.
• Contracts and other arrangements between the
debtor and its creditors will be deemed as continuing
in application but only to the extent that they do not
conflict with the provisions of the Rehabilitation
Plan.

DOING BUSINESS IN THE PHILIPPINES 89


Out-of-Court or Informal A standstill period, not exceeding 120 days, may be
agreed upon by the parties pending negotiation and
Restructuring Agreements and finalization of the out-of-court or informal restructuring.
Rehabilitation Plans The standstill period will be effective and enforceable
not only against the contracting parties but also against
In addition to the existing court-supervised and pre- the other creditors; provided that the necessary creditor
negotiated rehabilitation, the FRIA introduces out- of- approval on the standstill period is obtained and notice
court rehabilitation (OCRA) or informal restructuring. thereof is published in a newspaper of general circulation
Minimum Requirements once a week for two (2) consecutive weeks.

The following are the minimum requirements for an out- Cram-Down Effect
of-court or informal restructuring/work-out agreement A restructuring/workout agreement or Rehabilitation
or Rehabilitation Plan under the FRIA: Plan that is approved pursuant to an informal work-out
• The debtor must agree to the out-of-court or informal framework will have the same legal effect as a court-
restructuring/workout agreement or Rehabilitation approved Rehabilitation Plan.
Plan; Any court action or other proceedings arising from, or
• It must be approved by creditors representing at relating to, the out-of-court or informal restructuring
least 67% of the secured obligations of the debtor; shall not stay its implementation, unless the relevant
party is able to secure a temporary restraining order or
• It must be approved by creditors representing at injunctive relief from the Court of Appeals.
least 75% of the unsecured obligations of the debtor;
• It must be approved by creditors holding at least 85%
of the total liabilities, secured and unsecured, of the
debtor.

Liquidation Proceedings (Individuals or Corporations)


In cases where the debtor does not have enough assets/ Effects of the Liquidation Order
properties to cover his/her obligations or is generally
unable to pay his or her liabilities as they fall due in the Upon the issuance of the Liquidation Order:
ordinary course of business, a liquidation proceeding may • the juridical debtor will be deemed dissolved and its
be initiated. It may be voluntary or involuntary. corporate or juridical existence terminated;
Voluntary Liquidation • legal title to and control of all the assets of the
debtor, except those that may be exempt from
An insolvent debtor may apply for liquidation by filing execution, will be deemed vested in the liquidator or,
a verified petition for liquidation with the court. The pending his or her election or appointment, with the
petition must establish the insolvency of the debtor, and court;
must contain the following:
• all contracts of the debtor will be deemed terminated
• A schedule of the debtor’s debts and liabilities and/or breached, unless the liquidator, within 90
including a list of creditors with their addresses, days from the date of his or her assumption of office,
amounts of claims and collaterals, or securities, if any declares otherwise and the contracting party agrees;
• An inventory of all its assets including receivables • no separate action for the collection of an unsecured
and claims against third parties claim will be allowed. Such actions already pending
• The names of at least three nominees to the position will be transferred to the liquidator to accept and
of liquidator settle or contest. If the liquidator contests or disputes
the claim, the court will allow, hear and resolve such
At any time during the pendency of court-supervised or contest except when the case is already on appeal. In
pre-negotiated rehabilitation proceedings, the debtor such a case, the suit may proceed to judgment, and
may also initiate liquidation proceedings by filing a motion any final and executory judgment therein for a claim
to convert the rehabilitation proceedings into liquidation against the debtor will be filed and allowed in court;
proceedings in the same court where the rehabilitation and
proceedings are pending.
• no foreclosure proceeding will be allowed for a
If the court finds the petition or the motion, as the case period of 180 days.
may be, to be sufficient in form and substance, the court
will issue a Liquidation Order.

90 DOING BUSINESS IN THE PHILIPPINES


Rights of Secured Creditors Concurrence and Preference of
The Liquidation Order will not affect the right of a secured Credits
creditor to enforce his or her lien in accordance with the The Liquidation Plan must ensure that the concurrence
applicable contract or law. A secured creditor may: and preference of credits as enumerated in the Civil
• waive his or her right under the security or lien, prove Code and other relevant laws will be observed, unless a
his or her claim in the liquidation proceedings and preferred creditor voluntarily waives his or her preferred
share in the distribution of the assets of the debtor; right. Credits for services rendered by employees or
or laborers to the debtor shall enjoy first preference, unless
the claims constitute legal liens under relevant provisions
• maintain his or her rights under the security or lien. of the Civil Code.
If the secured creditor maintains his or her rights under Certain types of credits enjoy preference with respect
the security or lien: to specific movable or immovable properties (Special
• the value of the property may be fixed in a manner Preferred Credits).
agreed upon by the creditor and the liquidator. When Among the Special Preferred Credits, taxes and
the value of the property is less than the claim it assessments due upon the property to which the claims
secures, the liquidator may convey the property to relate enjoy absolute preference. All the remaining classes
the secured creditor and the latter will be admitted of Special Preferred Credits with respect to specific
in the liquidation proceedings as a creditor for the movable or immovable property (e.g., credits secured
balance. If its value exceeds the claim secured, the by a pledge or mortgage) do not enjoy priority among
liquidator may convey the property to the creditor themselves, but must be paid concurrently and pro rata,
and waive the debtor’s right of redemption upon i.e., in proportion to the amount of the respective credits.
receiving the excess from the creditor;
Credits that do not enjoy any preference with respect to
• the liquidator may sell the property and satisfy the specific property are satisfied in the order established
secured creditor’s entire claim from the proceeds of in Article 2244 of the Civil Code. Article 2244 provides
the sale; or for the preference of certain claims and credits which,
• the secured creditor may enforce the lien or foreclose without special privilege, appear in: (i) a public instrument
on the property pursuant to applicable laws. (i.e., the instrument is notarized); or (ii) a final judgment.
These credits have preference among themselves in the
Liquidation Plan order of priority of the dates of the instruments and of
the judgments, respectively.
Within three months from assumption into office, the
liquidator must submit a Liquidation Plan to the court. Claw-Back Provisions
The Liquidation Plan must, as a minimum, enumerate all
the assets of the debtor, all the claims against the debtor Any transaction occurring prior to the issuance of the
and a schedule of liquidation of the assets and payment Liquidation Order or, in case of the conversion of the
of the claims. rehabilitation proceedings, prior to the commencement
date, entered into by the debtor or involving its assets,
The liquidator must implement the Liquidation Plan may be rescinded or declared null and void on the ground
as approved by the court. Payments must be made that the same was executed with intent to defraud
to creditors only in accordance with the provisions of a creditor/s or which constitute undue preference of
the Liquidation Plan. But if the debtor and creditor are creditors.
mutually debtor and creditor of each other, one may be
set off against the other. If there is any balance, then the The liquidator or, with his or her conformity, a creditor
balance may be claimed in the liquidation proceedings. may initiate and prosecute any action to rescind, or
declare null and void, any transaction described in the
immediately preceding paragraph.

DOING BUSINESS IN THE PHILIPPINES 91


Cross-Border Insolvency Proceedings
The FRIA provides for recognition of foreign insolvency
proceedings and adopts the Model Law on Cross-Border
Insolvency of the UNCITRAL, subject to the FRIA Rules.
• The FRIA Rules apply when assistance is sought
before a Philippine court by a foreign court or a
foreign representative in connection with a foreign
proceeding;
• Assistance is sought in a foreign State in connection
with a proceeding governed by the FRIA and the FRIA
Rules;
• A foreign proceeding and a proceeding governed by
the FRIA and the FRIA Rules are concurrently taking
place; and
• Creditors in a foreign State have an interest in
requesting the commencement of, or participating
in, a proceeding under the FRIA Rules for court-
supervised rehabilitation, pre-negotiated
rehabilitation or OCRA.
Foreign creditors are accorded the same rights as
creditors in the Philippines in proceedings involving court-
supervised rehabilitation, pre-negotiated rehabilitation
and OCRA governed by the FRIA Rules.
However, courts must refuse to take any action in any
cross-border insolvency proceeding where: (a) the action
would be manifestly contrary to the public policy of the
Philippines; and (b) the court finds that the country where
the foreign rehabilitation proceeding is taking place does
not extend recognition to a Philippine rehabilitation
proceeding, or that the country of which the petitioner-
foreign creditor is a national does not grant the same
rights to a Philippine creditor in a manner substantially in
accordance with the FRIA Rules.

92 DOING BUSINESS IN THE PHILIPPINES


S C HE D ULE A

MALACAÑAN PALACE
MANILA
BY THE PRESIDENT OF THE PHILIPPINES
EXECUTIVE ORDER NO. 184

PROMULGATING THE TENTH REGULAR FOREIGN INVESTMENT NEGATIVE LIST


WHEREAS, Republic Act (RA) No. 7042, also known as the “Foreign Investments Act of 1991,” as amended by
RA No. 8179, provides for the formulation of a Regular Foreign Investment Negative List, covering investment areas/
activities which are open to foreign investors and/or reserved to Filipino nationals; and
WHEREAS, there is a need to formulate the Tenth Regular Foreign Investment Negative List, replacing the
Ninth Regular Foreign Investment Negative List, to reflect changes to List A, pursuant to existing laws.
NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Republic of the Philippines, by virtue of the
powers vested in me by law, do hereby order:
SECTION 1. Tenth Regular Foreign Investment Negative List. Only the investment areas and/or activities
listed in the Annex hereof shall be reserved to Philippine nationals, and hereafter shall be referred to as the Tenth
Regular Foreign Investment Negative List. The extent of foreign equity participation in these areas shall be limited to
the percentages indicated in the List.
SECTION 2. Amendments. Amendments to List A may be made at any time to reflect changes instituted in
specific laws while amendments to List B shall not be made more often than once every two years, pursuant to Section
8 of RA No. 7042, as amended, and its revised implementing rules and regulations.
SECTION 3. Repeal. All issuances, orders, rules and regulations, or parts thereof, which are inconsistent with
this Order are hereby repealed, amended or modified accordingly.
SECTION 4. Separability. If any provision of this Order is declared invalid or unconstitutional, the other
provisions not affected thereby shall remain valid and subsisting.
SECTION 5. Effectivity. This Order shall take effect fifteen (15) days after its publication in a newspaper of
general circulation.
DONE, in the City of Manila, this 29th day of May, in the year of our Lord Two Thousand and Fifteen.

By the President:
(signed)
PAQUITO N. OCHOA, JR.
Executive Secretary

DOING BUSINESS IN THE PHILIPPINES 93


ANNEX
TENTH REGULAR FOREIGN INVESTMENT NEGATIVE LIST
LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION AND SPECIFIC LAWS

No Foreign Equity
1. Mass media except recording (Art. XVI, Sec. 11 of the Constitution; Presidential Memorandum dated 05 May 1994)
2. Practice of professions1 (Art. XII, Sec. 14 of the Constitution, Sec 1 of RA 5181 Sec. 7.j of RA 8981)
a. Pharmacy (RA 5921)
b. Radiologic and x-ray technology (RA 7431)
c. Criminology (RA 6506)
d. Forestry (RA 6239)
e. Law (Art. VIII, Section 5 of the Constitution; Rule 138, Sec. 2 of the Rules of Court of the Philippines)
3. Retail trade enterprises with paid-up capital of less than US$2,500,000 (Sec. 5 of RA 8762)2
4. Cooperatives (Ch. III, Art. 26 of RA 6938)
5. Private security agencies (Sec. 4 of RA 5487)
6. Small-scale mining (Sec. 3 of RA 7076)
7. Utilization of marine resources in archipelagic waters, territorial sea, and exclusive economic zone as well as small-
scale utilization of natural resources in rivers, lakes, bays, and lagoons (Art. XII, Sec. 2 of the Constitution)
8. Ownership, operation and management of cockpits (Sec. 5 of PD 449)
9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons (Art. II, Sec. 8 of the Constitution)3
10. Manufacture, repair, stockpiling and/or distribution of biological, chemical and radiological weapons and anti-
personnel mines (various treaties to which the Philippines is a signatory and conventions supported by the Philippines)
3

11. Manufacture of firecrackers and other pyrotechnic devices (Sec. 5 of RA 7183)

Up to Twenty Percent (20%) Foreign Equity


12. Private radio communications network (RA 3846)

Up to Twenty-Five Percent (25%) Foreign Equity


13. Private recruitment, whether for local or overseas employment (Art. 27 of PD 442)
14. Contracts for the construction and repair of locally-funded public works (Sec. 1 of Commonwealth Act No. 541,
Letter of Instruction No. 630) except:
a. Infrastructure/development projects covered in RA 7718; and
b. Projects which are foreign funded or assisted and required to undergo international competitive bidding (Sec. 2(a)
of RA 7718)

1 Foreigners are allowed to practice the following professions provided their design. Architecture, chemistry, electronics engineering, environmental planning,
country allows Filipinos to be admitted to the practice of these professions: guidance counseling, landscape architecture, metallurgical engineering, naval
aeronautical engineering, agricultural engineering, chemical engineering, architecture and marine engineering, psychology, real estate service (real estate
civil engineering, electrical engineering, electronics engineering, electronics consultant, real estate appraiser, real estate assessor, real estate broker and real
technician, geodetic engineering, mechanical engineering, metallurgical estate salesperson), sanitary engineering and interior design allow corporate
engineering, mining engineering, naval architecture and marine engineering, practice by Filipinos.
sanitary engineering, medicine, medical technology, dentistry, midwifery,
nursing, nutrition and dietetics, optometry, physical and occupational therapy, 2 Full foreign participation is allowed for retail trade enterprises: (a) with paid-
veterinary medicine, accountancy, architecture, chemistry, customs brokerage, up capital of US$2,500,000 or more provided that investments for establishing
environmental planning, geology, landscape architecture, librarianship, marine a store is not less than US$830,000; or (b) specializing in high end or luxury
deck officers, marine engine officers, master plumbing, sugar technology, social products, provided that the paid-up capital per store is not less than US$250,000
work, teaching, agriculture, fisheries, guidance counseling, real estate service (Sec. 5 of RA 8762).
(real estate consultant, real estate appraiser, real estate assessor, real estate
3 Domestic investments are also prohibited (Art. II, Sec. 8 of the Constitution;
broker and real estate salesperson), respiratory therapy, psychology and interior
Conventions/Treaties to which the Philippines is a signatory).

94 DOING BUSINESS IN THE PHILIPPINES


15. Contracts for the construction of defense-related structures (Sec. 1 of CA 541)
Up to Thirty Percent (30%) Foreign Equity
16. Advertising (Art. XVI, Sec. 11 of the Constitution)

Up to Forty Percent (40%) Foreign Equity4


17. Exploration, development and utilization of natural resources (Art. XII, Sec. 2 of the Constitution)5
18. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5 Sec. 22 of CA 141; Sec 4 of RA 9182)
19. Operation of public utilities (Art. XII, Sec. 11 of the Constitution; Sec. 16 of CA 146)6,7
20. Educational institutions other than those established by religious groups and mission boards (Art. XIV, Sec. 4 of the
Constitution)8
21. Culture, production, milling, processing, trading except retailing, of rice and corn and acquiring, by barter, purchase
or otherwise, rice and corn and the by-products thereof (Sec. 5 of PD 194)9
22. Contracts for the supply of materials, goods and commodities to government-owned or controlled corporation,
company, agency or municipal corporation (Sec. 1 of RA 5183)
23. Facility operator of an infrastructure or a development facility requiring a public utility franchise (Art. XII, Sec. 11 of
the Constitution; Sec. 2(a) of RA 7718)
24. Operation of deep sea commercial fishing vessels (Sec. 27 of RA 8550)
25. Adjustment companies (Sec. 332 of RA 10607 amending PD 612)
26. Ownership of condominium units (Sec. 5 of RA 4726)

LIST B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY, DEFENSE, RISK TO HEALTH AND MORALS
AND PROTECTION OF SMALL- AND MEDIUM-SCALE ENTERPRISES
Up to Forty Percent (40 %) Foreign Equity
1. Manufacture, repair, storage, and/or distribution of products and/or ingredients requiring Philippine National Police
(PNP) clearance:
a. Firearms (handguns to shotguns), parts of firearms and ammunition therefore, instruments or implements used or
intended to be used in the manufacture of firearms
b. Gunpowder
c. Dynamite
d. Blasting supplies
e. Ingredients used in making explosives
i. Chlorates of potassium and sodium
ii. Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11). calcium and cuprite
iii. Nitric acid
iv. Nitrocellulose

4 Lending companies regulated by SEC are allowed to have up to 49% foreign 7 A “public utility” is a business or service engaged in regularly supplying the
equity participation (Sec.6 of RA 9474). Financing companies and investment public with some commodity or service of consequence such as electricity, gas,
houses regulated by SEC are allowed to have up to 60% foreign equity water, transportation, telephone or telegraph service (Supreme Court ruling on
participation (Sec. 6 of RA 5980 as amended by RA 8556; PD 129 as amended JG Summit Holdings vs. Court of Appeals, et al., September 24, 2003). Power
by RA 8366). generation and the supply of electricity to the contestable market are not
considered as public utility operation (Sec. 6 and Sec. 29, respectively, of RA 9136).
5 Full foreign participation is allowed through financial or technical assistance
agreement with the President (Art. XII, Sec. 2 of the Constitution). 8 Control and administration of educational institutions shall be vested in citizens
of the Philippines (Art. XIV, Sec. 4(2) of the Constitution).
6 The participation of foreign investors in the governing body of any public utility
enterprise shall be limited to their proportionate share in its capital, and all the 9 Full foreign participation is allowed provided that within the 30-year period
executive and managing officers of such corporation or association must be from start of operation the foreign investor shall divest a minimum of 60% of
citizens of the Philippines (Article XII, Section II of the Constitution). their equity to Filipino citizens (Sec. 5 of PD 194; NFA Council Resolution No. 193
s. 1998).

DOING BUSINESS IN THE PHILIPPINES 95


v. Perchlorates of ammonium, potassium and sodium
vi. Dinitrocellulose
vii. Glycerol
viii. Amorphous phosphorus
ix. Hydrogen peroxide
x. Strontium nitrate powder
xi. Toluene
f. Telescopic sights, sniper scope and other similar devices
However, the manufacture or repair of these items may be authorized by the Chief of the PNP to non Philippine
nationals; Provided that a substantial percentage of output, as determined by the said agency, is exported. Provided
further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance (RA
7042 as amended by RA 8179).
2. Manufacture, repair, storage and/or distribution of products requiring Department of National Defense (DND)
clearance:
a. Guns and ammunition for warfare
b. Military ordnance and parts thereof (e.g., torpedoes, depth charges, bombs, grenades, missiles)
c. Gunnery, bombing and fire control systems and components
d. Guided missiles/missile systems and components
e. Tactical aircraft (fixed and rotary-winged), parts and components thereof|
f. Space vehicles and component systems
g. Combat vessels (air, land and naval) and auxiliaries
h. Weapons repair and maintenance equipment
i. Military communications equipment
j. Night vision equipment
k. Stimulated coherent radiation devices, components and accessories
l. Armament training devices
m. Others as may be determined by the Secretary of the DND
However, the manufacture or repair of these items may be authorized by the Secretary of National Defense to non-
Philippine nationals; Provided that a substantial percentage of output, as determined by the said agency, is exported.
Provided further that the extent of foreign equity ownership allowed shall be specified in the said authority/clearance
(RA 7042 as amended by RA 8179).
3. Manufacture and distribution of dangerous drugs (RA 7042 as amended by RA 8179)
4. Sauna and steam bathhouses, massage clinics and other like activities regulated by law because of risks posed to
public health and morals (RA 7042 as amended by RA 8179)
5. All forms of gambling (RA 7042 as amended by RA 8179) except those covered by investment agreements with
PAGCOR (PD 1869 as amended by RA 9487)
6. Domestic market enterprises with paid-in equity capital of less than the equivalent of US$200,000 (RA 7042 as
amended by RA 8179)
7. Domestic market enterprises which involve advanced technology or employ at least fifty (50) direct employees with
paid-in equity capital of less than the equivalent of US$100,000 (RA 7042 as amended by RA 8179)

96 DOING BUSINESS IN THE PHILIPPINES


S C HE D ULE B
MALACAÑAN PALACE
MANILA
MEMORANDUM ORDER NO. 12
APPROVING THE 2017 INVESTMENT PRIORITIES PLAN

Pursuant to Article 29 of Executive Order No. 226 (s. 1987) or the Omnibus Investments Code of 1987, as amended, the
attached 2017 Investment Priorities Plan (IPP) is hereby APPROVED.
Upon effectivity of the IPP, all government agencies and entities are enjoined to issue the necessary regulations to
ensure its implementation in a synchronized and integrated manner. No government body shall adopt any policy or
take any course of action contrary to, or inconsistent with, the IPP.
The Chairman of the Board of Investments shall render an annual report to the President on the accomplishments and
implementation of the IPP.
This Order shall take effect fifteen (15) days after its publication in a newspaper of general circulation as required
under Article 31 of the Omnibus Investments Code of 1987.
DONE, in the City of Manila this 28th day of February, in the year of our Lord, Two Thousand and Seventeen.

By the President:
(signed)
SALVADOR C. MEDIALDEA
Executive Secretary

DOING BUSINESS IN THE PHILIPPINES 97


I. PREFERRED ACTIVITIES FOR INVESTMENT
A. Preferred Activities
1. All Qualified Manufacturing Activities including Agro-Processing
This covers the manufacture of industrial goods and processing of agricultural and fishery products, including Halal
and Kosher food, into (a) semi-finished/intermediate goods for use as inputs in the production of other goods, or (b)
finished products or consumer goods for final consumption.
This also covers the manufacture of modular housing components and machinery and equipment including parts and
components.
Except for modernization projects, only projects located outside Metro Manila may qualify for registration.
2. Agriculture, Fishery and Forestry
This covers commercial production of agricultural, fishery and forestry products.
This also covers production of seeds and seedlings, and establishment of nurseries and hatcheries, and support
services and infrastructures, such as, facilities for drying, cold chain storage, blast freezing, bulk handling and storage;
harvesting, plowing, and spraying/dusting; packing houses, trading centers, ice plants in Less Developed Areas, AAA
slaughterhouse, AAA dressing plant.
Except for modernization projects, only projects located outside Metro Manila may qualify for registration.
Modernization projects include those for agricultural support services and infrastructure only.
3. Strategic Services1
a. IC Design
This covers all logic and circuit design techniques required to design integrated circuits (ICs).
b. Creative Industries/Knowledge-Based Services
This covers IT-BPM services for the domestic market (e.g., contact centers, data analytics), and those that involve
original content such as animation, software development, game development, health information management
systems, and engineering design.
This also covers digital or technological start-ups/activities.
c. Maintenance, Repair, and Overhaul (MRO) of aircraft
This covers the MRO of all types of aircraft.
d. Charging/Refueling Stations for Alternative Energy Vehicles
This covers the establishment of charging/refueling stations for alternative energy vehicles except LPG-run vehicles.
e. Industrial Waste Treatment
This covers the establishment of treatment facilities for toxic and hazardous wastes (THW) from an industrial
operation.
f. Telecommunications
This covers the establishment of connectivity facilities for fixed and mobile broadband services.
Only new players may qualify for registration.
g. State-of-the-art Engineering, Procurement, and Construction
This covers engineering design, procurement, and construction for industrial plants and infrastructure.
4. Healthcare Services including Drug Rehabilitation Centers2
This covers the establishment and operation of general and specialty hospitals, and other medical/healthcare facilities
including drug rehabilitation centers.
5. Mass Housing
This covers the development of mass housing units based on a price ceiling of Php2.0 Million.

1 Subject to the criteria on the qualification for registration of projects to be defined and clarified by the Board in the implementing guidelines.

2 Subject to positive list of location as endorsed by the DOH.

98 DOING BUSINESS IN THE PHILIPPINES


This also covers in-city low-cost housing projects for lease.
Except for in-city low-cost housing for lease, only projects located outside Metro Manila may qualify for registration.
6. Infrastructure and Logistics including LGU-PPPs
This covers the establishment and operation of physical infrastructures vital to the country’ s economic development
and prosperity such as, but not limited to: airports, seaports, (air, land and water) transport, LNG storage and
regasification facilities, pipeline projects for oil and gas, bulk water treatment and supply, training facilities, testing
laboratories, and domestic industrial zones.
This also covers PPP projects including those initiated and/or implemented by Local Government Units (LGUs).
7. Innovation Drivers
This covers research and development (R&D) activities, conduct of clinical trials (including drug trials) and the
establishment of Centers of Excellence, innovation centers, business incubation hubs, and fabrication laboratories
(fablabs)/co-working spaces.
This also covers commercialization of new and emerging technologies and products of DOST or government-funded
R&D, such as, but not limited to:
• Agricultural biotechnology tools
• Disaster mitigation/prevention hardware or software
• Hardware or software for increasing agricultural productivity
• Mechanized means for natural resources conservation
• Portable technologies - innovation on existing bulky or heavy device to make it portable, or a new device or service
that can be brought virtually anywhere
• Hardware or software for the prevention of disease outbreaks
• Remote monitoring devices or systems
• Professional services for remote sensing
• Hardware Of software for the upgrading of local industries
• Photonics and Nanotechnology
• Natural health products
8. Inclusive Business (IB) Models
This covers business activities of medium and large enterprises (MLEs) in the agribusiness and tourism sectors that
provide business opportunities to micro and small enterprises (MSEs) as part of their value chains.
IB projects may quality for Pioneer status.
9. Environment or Climate Change-Related Projects
This covers manufacture/assembly of goods and the establishment of energy efficiency-related facilities where either
utilization of which would significantly lead to either the efficient use of energy, natural resources or raw materials;
minimize/prevent pollution; or reduce greenhouse gas emissions.
This also covers green ship recycling based on international standards, and the establishment of privately-owned
materials recovery facility.
10. Energy
This covers power generation projects utilizing conventional fuels (i.e., coal, diesel, bunker, natural gas, and geothermal),
waste heat and other wastes, and the establishment of battery energy storage systems.
B. Export Activities
1. Production and manufacture of export products
2. Services Exports3
3. Activities in support of exporters

3 Contact centers and non-voice business processing activities that will be located in Metro Manila may no longer be qualified for incentives availment with the Board of
Investments under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987, as amended, by year 2020.

DOING BUSINESS IN THE PHILIPPINES 99


C. Special Laws
This covers activities where inclusion in the IPP is mandated for purposes of incentives, as follows:
1. Industrial Tree Plantation (P.D. 705);
2. Mining (R.A. 7942) (limited to capital equipment incentive);
3. Publication or Printing of Books/Textbooks (R.A. 8047);
4. Refining, Storage, Marketing and Distribution of Petroleum Products (R.A. 8479);
5. Rehabilitation, Self-Development and Self-Reliance of Persons with Disability (R.A. 7277);
6. Renewable Energy (R.A. 9513); and
7. Tourism (RA. 9593).

II. ARMM LIST


The 2017-2019 ARMM List contains the following priority investment areas:
A. EXPORT ACTIVITIES
1. Export Trader and Service Exporters
2. Support Activities for Exporters
B. AGRICULTURE, AGRIBUSINESS, AQUACULTURE and FISHERY
B.1. Agriculture and Agribusiness
This covers all types of agricultural production, farming, plantation, processing or manufacturing, as long as, the
land or the agricultural production, plantation, processing or manufacturing is based in ARMM. It includes value-
chain, value-adding, logistical and supply chain agribusiness activities based in or involving ARMM agricultural
products or the farmers of the region, such as silo storage and drying facilities.
B.2. Aquaculture and Fishery
This covers the aquamarine industry; inland water resources; seaweeds; fishing; fish pond including other marine,
inland and brackish water farming, such as abalone farms, shrimp farming or crab fattening; the establishment of
hatcheries or breeding of fingerlings and processing of such marine and inland water resources.
C. BASIC INDUSTRIES
This covers the production of pharmaceuticals such as antibiotics; traditional or herbal medicines and related activities
such as bio-prospecting; textile or garments; water supply and treatment; ice plant or refrigeration; traditional craft
like boat building; production of inorganic and organic fertilizer; all types of heavy industries, such as the steel industry,
petrochemical industry, shipbuilding, ship breaking, ship repair and servicing; dredging for industrial purposes and
landfill; cement production and concrete aggregates.
D. INFRASTRUCTURE AND SERVICES
This covers strategic infrastructure projects such as railways, bridges, tollways, flood control and support industries like
sand and gravel, batching plant and pre-mixing of cements; air, land and water transportation; telecommunications to
include the construction and operation of international gateway facilities both satellite-linked or linked by terrestrial
and submarine cables for internet connectivity, so long as these are based in ARMM and are holding ARMM franchise,
or servicing ARMM areas including to and from ARMM in order to increase inter-connectivity and support regional or
national integration.
E. INDUSTRIAL SERVICE FACILITIES
This covers industrial centers or industrial estates to include testing and quality control laboratories; manpower
training and demonstration centers; vocational and technical skills services and facilities; call centers and Information
Technology related enterprises such as business process outsourcing; tool and dye shops and similar facilities; metal
casting and metal working; furniture and fixtures; ceramics and tile-making; petrochemical complex and industrial
gases.

100 DOING BUSINESS IN THE PHILIPPINES


F. ENGINEERING INDUSTRIES
This covers engineering products; electronics and telecommunication products; and fabrication of construction
materials including pre-fabricated construction materials using new technologies (e.g. 3D printing) or indigenously
sourced materials.
G. LOGISTICS
This covers the logistics, supply chain and logistics network industry; shipping, hauling and trucking; cargo shippers
and forwarders; bulk carrier; warehousing and depots; storage; and other logistics facilities principally based in ARMM
including transhipment hubs and services using ARMM ports, airports or located near its special economic zones.
This also contemplates the ports industry and allied industry in the ARMM and ancillary services, such as arrastre and
stevedoring, because the ARMM needs to attract more port industry players.
H. BIMP - EAGA RELATED INVESTMENT ENTERPRISES
This covers enterprises using the BIMP-EAGA framework on trade and investments and who are located or have their
base of operations in the BIMP-EAGA namely, Brunei; Sabah and Sarawak in Malaysia; Maluku, Sulawesi, Kalimantan and
Irian Jaya in Indonesia; and Mindanao and Palawan in the Philippines, who shall invest and engage in economic activity
in the ARMM including traditional cross-border trade and the age-old barter trading to encourage the formalization of
peripheral shadow economies.
I. TOURISM
This covers the establishment of tourism-related facilities and attractions; tourism-related services; hotel and
restaurants catering to ARMM tourists; Halal-based tourism; tourist accommodation facilities; tourist transport
facilities and development of retirement villages, which shall include health or medical facilities and other amenities.
J. HEALTH AND EDUCATION SERVICES AND FACILITIES
The ARMM has some of the lowest indicators in the country regarding health and education as reflected in the
Human Development Index. For this purpose, there is a need for incentives to be given to investors in the health
and educational sectors such as putting-up of private hospitals, medical clinics, wellness centers, primary education,
secondary education, tertiary education (colleges, universities and vocational-technical schools) and ancillary or
support services such as teacher training centers.
K. HALAL INDUSTRY
The 2004-2010 MTPDP envisioned that ARMM shall be the production and processing center for the Halal industry.
ARMM being the only Muslim region in the country has a comparative advantage in the Halal industry since majority of
Halal consumers are in the region. Any Halal related business enterprises that obtain the necessary Halal certification
or is operating under Islamic (Shariah) law principles shall be covered. Halal refers to the permissible products and
services under Islamic Law.
L. BANKING, NON-BANK FINANCIAL INSTITUTIONS AND FACILITIES
Aside from conventional banking and finance, microfinance and cooperative financing, this includes Islamic banking
and finance; and Islamic microfinance and pawnshop operations, since the ARMM is the most unbanked region in the
country and there is a need for financial inclusivity in accordance with the provisions of the Organic Act (Sec. 7, Art. IX,
R.A. No. 9054). This also includes remittance centers to cater to remittances of Overseas Filipino Workers. Guidelines
for this purpose may be issued by the RBOI after consultation with the relevant stakeholders and institutions engaged
in financial access and financial inclusivity programs and activities.
M. ENERGY
More energy investments are needed in the ARMM considering that the household electrification rate in the ARMM
is the most dismal in the country with only 34% as compared with the national rate of 74%. This covers energy
investments in upstream and downstream industries such as power generation, transmission and distribution. Off-grid
and Small Power Utilities Group or SPUG areas shall be prioritized for investments and giving of incentives considering
that these are stranded markets for electricity. It covers not only energy but also ancillary services and in the context of
ARMM, this means the construction of substations and transmission and distribution towers considering that there are
also frequent power outages due to disruption of such facilities from man made and natural disaster causes.

DOING BUSINESS IN THE PHILIPPINES 101


LIST O F A C R ON Y M S

ABS - Asset-Backed Securities EFTA - European Free Trade Association


ADR Act - Alternative Dispute Resolution Act of 2004 EIA - Environmental Impact Assessment
AEP - Alien Employment Permit EIS - Environmental Impact Statement
ARMM – Autonomous Region of Muslim Mindanao EMB - Environmental Management Bureau
ASEAN - Association of Southeast Nations EP – Exploration Permit
BCDA - Bases Conversion and Development Authority EPIRA - Electric Power Industry Reform Act of 2001
BIMP-EAGA – Brunei Darussalam-Indonesia-Malaysia- ERC – Energy Regulatory Commission
Philippines East ASEAN Growth Area
FDA - Food and Drug Administration
BIR – Bureau of Internal Revenue
FIA – Foreign Investments Act of 1991
BOC – Bureau of Customs
FIA IRR – Foreign Investments Act Implementing Rules
BOI – Board of Investments and Regulation
BOT - Build-Operate and Transfer FLSP - Financial Liquidation and Suspension of Payments
BSP - Bangko Sentral ng Pilipinas (Central Bank of the FRIA - Financial Rehabilitation and Insolvency Act
Philippines)
FTA – Free Trade Agreement
CAM - Court-Annexed Mediation
FTAA - Financial or Technical Assistance Agreement
CBA - Collective Bargaining Agreement
GDRP - General Data Protection Regulation
CDC - Clark Development Corporation
GSP+ - Generalized System of Preferences Plus
CIAC - Construction Industry Arbitration Commission
HDMF - Home Development Mutual Fund
CPE – Customer Premises Equipment
IB – Inclusive Business models
CRO - Contract Research Organizations
IC - Insurance Commission
CSEZ - Clark Special Economic Zone
IC – Integrated Circuits
DENR - Department of Environment and Natural
IEE - Initial Environmental Examination
Resources
IP Code - Intellectual Property Code of the Philippines
DOE – Department of Energy
IPO - Intellectual Property Office
DOJ - Department of Justice
IPP - Investments Priorities Plan
DOLE – Department of Labor and Employment
IRR – Implementing Rules and Regulations
DPA - Data Privacy Act
IT – Information Technology
DTI - Department of Trade and Industry
JDR - Judicial Dispute Resolution
EC - Employees’ Compensation
JVA - Joint Venture Agreements
ECC - Environmental Compliance Certificate
LGU – Local Government Unit

102 DOING BUSINESS IN THE PHILIPPINES


LTO – License to Operate PRA – Philippine Retirement Authority
M&A - Mergers and Acquisitions PTE - Public Telecommunications Entity
MCTC - Municipal Circuit Trial Courts RA – Republic Act
Med-Arb - Mediation-Arbitration RE Act - Renewable Energy Act of 2008
MeTC – Metropolitan Trial Courts RHQ – Regional Headquarters
MORFXT - Manual of Regulations on Foreign Exchange ROHQ - Regional Operating Headquarters
Transactions
SBMA - Subic Bay Metropolitan Authority
MPP - Mineral Processing Permit
SEC – Securities and Exchange Commission
MPSA – Mineral Production Sharing Agreement
SRC - Securities Regulation Code
MRO - Maintenance, Repair, and Overhaul
SSS - Social Security System
MTC – Municipal Trial Courts
SFZ - Subic Freeport Zone
MTCC - Municipal Trial Courts in Cities
SIRV - Special Investor’s Resident Visa
NGCP - National Grid Corporation of the Philippines
SPE - Special Purpose Entity
NPC - National Privacy Commission
SRRV – Special Resident Retiree’s Visa
NREB - National Renewable Energy Board
SSEZ - Subic Special Economic Zone
NTC - National Telecommunications Commission
SWP - Special Work Permit
OCRA - Out-of-Court Restructuring Agreements
TRANSCO - National Transmission Corporation
OIC - Omnibus Investments Code
TRIPS - Trade Related Aspects of Intellectual Property
PA – Provisional Authority Rights
PCA - Philippine Competition Act TTA - technology transfer arrangement
PCBA – Philippine Contractors Accreditation Board UITF – Unit Investment Trust Fund
PCC - Philippine Competition Commission UNCITRAL - United Nations Commission on International
Trade Law
PD – Presidential Decree
VAS – Value Added Services
PDRCI - Philippine Dispute Resolution Center, Inc.
VAT – Value Added Tax
PEZA - Philippine Economic Zone Authority
VoIP – Voice-Over Internet Protocol
PhilHealth - Philippine Health Insurance Corporation
PHP – Philippine Peso
PHREB - Philippine Health Research Ethics Board
PNHRS - Philippine National Health Research System
PPP – Public Private Partnership

DOING BUSINESS IN THE PHILIPPINES 103


EU-Philippines Business Network
19th Floor, Philippine AXA Life Centre,
Sen. Gil J. Puyat Ave,
Makati, 1200 Metro Manila
Philippines
(+632)832-8121 to 22

19th Floor, Philippine AXA Life Centre,


Sen. Gil J. Puyat Avenue cor. Tindalo St.,
Makati City, 1200 Metro Manila, Philippines
Phone: (+632) 845.1324 • (+632) 759.6680
Fax: (+632) 845.1395 • (+632) 759.6690

Quisumbing Torres
QTInfoDesk@quisumbingtorres.com
12th Floor, Net One Center
26th Street corner 3rd Avenue
Crescent Park West, Bonifacio Global City
Taguig City, Philippines 1634
+63 2 819 4700

104 DOING BUSINESS IN THE PHILIPPINES


D I R E C TO R Y O F C ONT A C TS
KEY GOVERNMENT AGENCIES
Department of Agrarian Reform Department of Finance Department of Public Works and
www.dar.gov.ph www.dof.gov.ph Highways
Elliptical Road, Diliman, Quezon City DOF Bldg., BSP Complex, Roxas Blvd., www.dpwh.gov.ph
(+632) 453-7980 Manila 2nd St., Port Area, Manila
contact_us@dar.gov.ph (+632) 525-0244 (+632) 304-3700
helpdesk@dof.gov.ph www.dpwh.gov.ph/dpwh/directory/
index
Department of Agriculture
www.da.gov.ph Department of Foreign Affairs
www.dfa.gov.ph Department of Science and
Elliptical Road, Diliman, Quezon City Technology
(+632) 273.AGRI (2474) / (+632) 928- DFA Home Office,
www.dost.gov.ph
8756 to 65 2330 Roxas Boulevard, Pasay City
DOST Building, Gen. Santos Ave.,
osec.da@gmail.com (+632) 834-3000 / 834-4000
Bicutan, Taguig City
(+632) 837-2071 to 82 / (+632) 837-
Department of Budget and Department of Health 2937
Management www.doh.gov.ph http://helpdesk.dost.gov.ph/
www.dbm.gov.ph San Lazaro Compound, Tayuman, alldirectory
Boncodin Hall, General Solano St., Sta. Cruz, Manila
San Miguel, Manila (+632) 651-7800 / (+632) 165-364 Department of Tourism
(+632) 657-3300 callcenter@doh.gov.ph www.tourism.gov.ph
osec@dbm.gov.ph 351 Senator Gil Puyat Ave., Makati City
Department of Information and (+632) 459-5200 to 459-5230
Department of Education Communication Technology webmaster@tourism.gov.ph
www.deped.gov.ph www.dict.gov.ph
DepEd Complex, Meralco Avenue, C.P Garcia Avenue, Diliman, Quezon Department of Transportation
Pasig City City
http://dotr.gov.ph
(+632) 636 1663 / 633 1942 (+632) 920-0101
The Columbia Tower, Bgy. Wack-Wack,
action@deped.gov.ph info@dict.gov.ph
Ortigas Avenue, Mandaluyong City
(+632) 790-8300 / 790-8400
Department of Energy Department of the Interior and Local
www.doe.gov.ph Government
www.dilg.gov.ph Department of Trade and Industry
Energy Center, Rizal Drive,
DILG NAPOLCOM Center, EDSA cor. www.dti.gov.ph
Bonifacio Global City, Taguig City
Quezon Avenue, Quezon City Trade & Industry Building,
(+632) 479-2900
(+632) 925-0330 / 925-0331 / 876-3454 361 Senator Gil J. Puyat Ave., Makati
https://www.doe.gov.ph/doe-help- City
desk
(+632) 751-0384
Department of Labor and
Employment ask@dti.gov.ph
Department of Environment and
Natural Resources www.dole.gov.ph http://www.dti.gov.ph/contact#trade-
and-investments-promotion-group-tipg
http://denr.gov.ph Muralla Wing cor. General Luna St.,
Visayas Avenue, Diliman, Quezon City Intramuros, Manila
(+632) 929-6626, 755-3330 (+632) 1349 / 527-3000
aksyonkalikasan@denr.gov.ph osec@dole.gov.ph

DOING BUSINESS IN THE PHILIPPINES 105


Board of Investments (BOI) Bureau of Customs Food & Drug Administration
www.boi.gov.ph www.customs.gov.ph Philippines
385 Sen. Gil Puyat Ave., Makati City South Harbor, Gate 3, Port Area, Manila www.fda.gov.ph
(+632) 897-6682 (+632) 917-3200 (3201 to 3205) 1781 Civic Drive, Filinvest Corporate
City, Alabang, Muntinlupa City
Investment Assistance Center (IAC) info@customs.gov.ph
(+632) 857-1900
http://investphilippines.gov.ph
info@fda.gov.ph
(+632) 895-3640 / 895-3641 / 895-3657 Bureau of Treasury
/ 895-8322 DL www.treasury.gov.ph
bossac@boi.gov.ph National Economic and Development
Palacio del Gobernador Bldg., Authority
Intramuros, Manila
www.neda.gov.ph
Philippine Economic Zone Authority (+632) 663-2287
NEDA Building, St. Jose Maria Escriva
www.peza.gov.ph webmaster@treasury.gov.ph Drive, Ortigas Center, Pasig City
Building 5, DOE-PNOC Complex, (+632) 631-0945 to 56
Energy Center, 34th Street, Philippine Government Electronic nedapr@neda.gov.ph
Bonifacio Global City, Taguig City Procurement System
(+632) 551-3451 http://philgeps.gov.ph
Natural Resources Development
info@peza.gov.ph Unit 608 Raffles Corporate Center, Corporation
F. Ortigas Jr. Rd., Ortigas Center, Pasig http://nrdc.denr.gov.ph
City
Tourism Infrastructure and 9th Floor, DENR By The Bay Building,
Enterprise Zone Authority (+632) 6406906 - 09
1515 Roxas Boulevard, Ermita, Manila
http://tieza.gov.ph agency@ps-philgeps.gov.ph
(+632) 521-9421 / 521-9466
142 Amorsolo St., Legaspi Village, supplier@ps-philgeps.gov.ph
nrdcweb@denr.gov.ph
Makati City
(+632) 824-1708 Philippine Export-Import Credit
Agency Maritime Industry Authority
http://tieza.gov.ph/contact-us/
directory-of-officials/ www.philexim.gov.ph www.marina.gov.ph
17/F Citibank Tower, Citibank Plaza, 984 Parkview Plaza, Taft Avenue cor.
Bureau of Immigration Makati City Kalaw Street, Manila
www.immigration.gov.ph (+632) 885-4700 (+632) 526-0107 / 523-9078
Magallanes Drive, Manila (HO) oadm@marina.gov.ph
(+632) 465-2400 Insurance Commission
xinfo@immigration.gov.ph www.insurance.gov.ph Metropolitan Waterworks and
1071 United Nations Ave., Ermita, Sewerage System
http://www.immigration.gov.ph/
contact-us/main-office Manila http://mwss.gov.ph
(+632) 523-8461-70 MWSS Compound, Katipunan Road,
Bureau of Internal Revenue pubassist@insurance.gov.ph Balara, Diliman, Quezon City
www.bir.gov.ph (+63 2) 922-2969
BIR National Office Bldg., BIR Road, Securities and Exchange Commission info@mwss.gov.ph
Diliman, Quezon City www.sec.gov.ph
(+632) 981-7000 SEC Bldg., EDSA, Greenhills, Public-Private Partnership Center
Mandaluyong City https://ppp.gov.ph
contact_us@bir.gov.ph
(+632) 584-0923 8th Floor, One Cyberpod Centris,
mis@sec.gov.ph Eton Centris, Piñahan, Quezon City
(+63 2) 709-4146
info@ppp.gov.ph

106 DOING BUSINESS IN THE PHILIPPINES


EU EMBASSIES & CONSULATES
Delegation of the European Union to Embassy of France Embassy of the Kingdom of the
the Philippines https://ph.ambafrance.org Netherlands
https://eeas.europa.eu/delegations/ 16th Floor Pacific Star Building, www.netherlandsandyou.nl/your-
philippines country-and-the-netherlands/
Sen. Gil Puyat cor. Makati Ave., philippines
30/F Tower 2, RCBC Plaza,
Makati City 26th Floor BDO Equitable Tower,
6819 Ayala Ave., Makati City
(+63 2) 857-6900 8751 Paseo de Roxas, Makati City
(+632) 859-5100
Delegation-Philippines@eeas.europa. (+632) 786-6666
eu Business France Philippines man@minbuza.nl
www.businessfrance.fr
34/F Rufino Pacific Tower, Embassy of Romania
Austrian Embassy Manila
6784 Ayala Ave. cor. Herrera Street, http://manila.mae.ro
https://www.bmeia.gv.at/en/austrian-
embassy-manila Legaspi Village, Makati City 6th Floor G.C. Corporate Plaza, 150
8th floor, One Orion Building, (+632) 811-1002 Legaspi St, Legaspi Village, Makati City
11th Avenue cor. 38th Street, (+63 2) 831-0784 / 892-7682
Bonifacio Global City, Taguig Embassy of the Federal Republic of manila.consul@mae.ro
(+63 2) 817-9191 Germany

Advantage Austria www.manila.diplo.de Embassy of Spain


www.advantageaustria.org/ph 25/F Tower 2, RCBC Plaza, www.exteriores.gob.es/Embajadas/
14th Floor, The Pacific Star Bldg., S 6819 Ayala Ave., Makati City MANILA
en. Gil J. Puyat Ave. cor. Makati Ave., (+632) 702-3033 Chancery:
Makati City wi-1@mani.diplo.de 27th Floor, BDO Equitable Tower,
(+63 2) 818-1581 / 810-3713 8751 Paseo de Roxas, Makati City
manila@advantageaustria.org Embassy of Greece (+63 2) 817-9997 / 817-6676
www.mfa.gr/manila emb.manila@maec.es
Embassy of the Kingdom of Belgium Unit 701 SEDCCO Bldg., Economic and Commercial Office:
http://philippines.diplomatie.belgium. 120 Rada Street, Legaspi Village, 27th floor, Yuchengco Tower,
be Makati City RCBC Plaza, Ayala Avenue cor.
Multinational Bancorporation Center (+632) 817-4444 / 817-3417 Sen. Gil J. Puyat Avenue, Makati City
9th floor, 6805 Ayala Ave., Makati City gremb.man@mfa.gr (+63 2) 843-3774 & 75 / 843-3783
(+63 2) 845-1869 to 73 manila@comercio.mineco.es
Manila@diplobel.fed.be Embassy of Hungary
https://manila.mfa.gov.hu Embassy of Sweden
Embassy of the Czech Republic 8th Floor DelRosarioLaw Centre, 21st www.swedenabroad.com/manila
www.mzv.cz/manila Drive, Bonifacio Global City, Taguig City
11th Floor Del Rosario Law Centre,
30/F Rufino Pacific Tower, (+632) 810-9186
21st Drive corner 20th Drive,
6784 Ayala Ave., Makati City mission.mnl@mfa.gov.hu
Bonifacio Global City, Taguig City
(+63 2) 811-1155 & 56 (+63 2) 811-7900
manila@embassy.mzv.cz Embassy of Italy
ambassaden.manila@gov.se
www.ambmanila.esteri.it

Royal Danish Embassy 6/F Zeta II Bldg. 191 Salcedo St.,


British Embassy Manila
http://filippinerne.um.dk Legaspi Village, Makati City
www.gov.uk/world/organisations/
11th/F 11th Corporate Center, (+63 2) 892 4531 / 4532 / 4533 / 4534 british-embassy-manila
11th Avenue cor. Triangle Drive, informazioni.manila@esteri.it 120 Upper McKinley Road,
Bonifacio Global City, Taguig City McKinley Hill, Taguig City
(+63 2) 865-8800 (+63 2) 858-2200
mnlamb@um.dk ukinthephilippines@fco.gov.uk
dit.manila@fco.gov.uk (Department
for International Trade Manila)

DOING BUSINESS IN THE PHILIPPINES 107


Consulate of the Republic of Bulgaria Consulate of Ireland Consulate General of the Republic of
No. 6 Lippay Street, San Lorenzo 3rd Floor, Max’s Building, 70 Jupiter Poland
Village, Makati City St., United Philippine Lines Inc.,
(+632) 817-5449 / 812-1169 / 812-1173 Bel-Air I Village, Makati City One Fort Santiago, Sta. Clara St.
renelledesma@yahoo.com (+632) 896-4668 / 897-8534 Intramuros, Manila
agnesarro@yahoo.com irishcon@pldtdsl.net (+632) 527-1582 / 527-7491 to 94
527-9721 to 24 / 527-1603
Consulate of the Republic of Croatia Consulate General of the Republic of mailadmin@uplines.net
4th Floor, Enzo Bldg., Latvia
399 Sen. Gil Puyat Ave., Makati City 2nd Floor, Coltrans Compound, Consulate of the Republic of Portugal
(+632) 895-2709 / 890-1919 2253 Aurora Blvd. (Tramo Road), 4/F Unit 410B, Mile Long Bldg.,
croatia.manila@gmail.com Pasay City Amorsolo cor. V.A. Rufino St.,
(+632) 833-2551 to 55 / 832-2767 Makati City
Consulate General of the Republic of 833-2358 / 831-8173 (+63 2) 813-0046 / 815-8380
Cyprus latviaconsulatephils@gmail.com, aarufino@yahoo.com, aarufino1205@
LG-03, Lower Ground Suite, rljoseph@coltranscargo.com gmail.com
Crispina Building, 1589 Quezon Ave.,
West Triangle, Quezon City Consulate of the Republic of Consulate of Slovakia
(+632) 925-1467 Lithuania 3/F A & R Bldg., 213 Rizal Avenue Ext.,
cyprusconsulate@elgrecomanila.com 1015 Renaissance 2000 Condo, Caloocan City
Meralco Ave., Ortigas Center, (+63 2) 366 4487
Consulate General of the Republic of Pasig City slovak.rep@gmail.com
Estonia (+632) 631-6260
6th Floor, CTC Bldg., consul@lithuania.ph Consulate of Slovenia
2232 Roxas Blvd., Pasay City Ground Floor, CENTREX House,
(+632) 832-3283 / 832-2760 Consulate of the Republic of Malta 206 Pilar St. corner Shaw Blvd.,
jnpena@mydestiny.net Unit 1242, Megaplaza Bldg., Mandaluyong City
ADB Avenue cor. Garnet Rd., (+63 2) 727 7484 / 726-6931 to 35
Consulate of the Republic of Finland Ortigas Center, Pasig City jluyulo@gmail.com
22nd Floor, (+632) 687-7245
Multinational Bancorporation Center, maltaconsul.manila@gov.mt,
6805 Ayala Ave., Makati City paaquino43@gmail.com
(+632) 817-1511 to 15
rki@mib.com.ph
EU CHAMBERS OF COMMERCE
European Chamber of Commerce of French Chamber of Commerce & Nordic Chamber of Commerce of the
the Philippines Industry in the Philippines (CCI Philippines
www.eccp.com France Philippines) http://nordcham.com.ph
19th Floor, Philippine AXA Life Centre, www.ccifrance-philippines.org 19F Philippine AXA Life Center,
Sen. Gil J. Puyat Ave. cor. Tindalo St., Suite 2901, 88 Corporate Center, Senator Gil J. Puyat Ave. cor. Tindalo
Makati City Sedeno cor. Valero St., St.,
(+632) 845-1324 / 759-6680 Salcedo Village, Makati City Makati City
(+632) 831-6374 to 77 (+632) 759-2246
Belgian-Filipino Business Club info@ccifrance-philippines.org info@nordcham.com.ph
http://belphil.org
c/o Belgian Trade Offices, German-Philippine Chamber of The Spanish Chamber of Commerce
Commerce & Industry in the Philippines (La Cámara)
The Embassy of Belgium
http://philippinen.ahk.de www.lacamaramanila.com
9/F Multinational Bancorporation
Centre, 8/ F Döhle Haus Manila, Unit 18-A, Chatham House,
6805 Ayala Avenue, Makati City 1227 30-38 Sen. Gil Puyat Ave., 116 Valero St. cor. VA Rufino,
(+632) 821-0643 / +63 927 671-6407 Barangay San Isidro, Makati City Salcedo Village, Makati City
(+632) 519-8110 (+632) 886-7643
British Chamber of Commerce in the info@gpcci.org lacamara@lacamaramanila.com
Philippines
www.britcham.org.ph Italian Chamber of Commerce in the Philippines – Netherlands Business
8/F W Fifth Avenue Building, Philippines, Inc. Council
5th Avenue cor. 32nd Street, http://iccpi.org.ph www.pnbc-ph.org
Bonifacio Global City, Taguig Suite 442, 4th Floor, Dusit Thani Rm. 2901, 88 Corporate Center,
Manila, Sedeno St. corner Valero St.,
(+632) 556-5232
1223 Ayala Center, Makati City Salcedo Village, Makati City
info@britcham.org.ph
+63 917-563-8633 / (+632) 978- (+632) 831-6374 loc. 110, +63 917
0279 302-2939
info@iccpi.org.ph frances@pnbc-ph.org

KEY BUSINESS ORGANIZATIONS


Philippine Chamber of Commerce Bankers Association of the Philippine Food Processors and
and Industry Philippines Exporters Organization, Inc.
http://philippinechamber.com http://bap.org.ph www.philfoodex.org.ph
PCCI Secretariat Office 19CD, 19F Citi Tower, Unit 1209, 12th Floor,
3F Commerce and Industry Plaza, 8741 Paseo de Roxas, Makati City Tycoon Centre Condominium,
1030 Campus Ave. cor. Park Ave., (+632) 810-3858 / 810-3859 Pearl Drive, Ortigas Center, Pasig City
McKinley Town Center, Fort Bonifacio, bapmail@bap.org.ph (+632) 949-4054
Taguig City secretariat@philfoodex.org.ph
(+632) 846 8196 Philippine Chamber of Food
secretariat@philippinechamber.com Manufacturers Inc. Philippine Retailers Association
www.foodchamber.ph www.philretailers.com
Chamber of Automotive 12th Floor, Unit 1216, Unit 2607 Jollibee Plaza,
Manufacturers of the Philippines Cityland 10 Tower II, F. Ortigas Jr. Road,
www.campiauto.org H.V dela Costa St. Salcedo Village, Ortigas Center, Pasig City
Office Suite 1206, 12th Floor, Makati City (+632) 687-4985 / 687-4180 / 687-4181
Jollibee Center Bldg., San Miguel Ave., (+632) 893-3893 / 359-2953 philretailers@gmail.com /
Pasig City foodchamber@gmail.com philretailers@yahoo.com
(+632) 632-9733 / 910-2580
campi@globelines.com.ph

DOING BUSINESS IN THE PHILIPPINES 109


Direct Selling Association of the Philippine Constructors Association, Philippine Travel Agencies
Philippines Inc. Association
www.dsap.ph www.philconstruct.com www.ptaa.org.ph
Unit 606 Cityland Shaw Tower, 3/F Padilla Bldg., Francisco Ortigas Jr. GV Center, No.104 Makaturing St.,
Shaw Blvd. cor. St. Francis St., Ave., Barangay Barangka Itaas, Mandaluyong
Mandaluyong City Ortigas Center, Pasig City City
(+632) 638-3089 (+632) 631-2778 / 631-3135 (+632) 997-2063 / 846 8373 / 831 0124
info@dsap.ph info@philconstruct.com ptaa@ptaa.org.ph

Computer Manufacturers, Pharmaceutical and Healthcare Chamber of Real Estate and Builders’
Distributors & Dealers Association of Association of the Philippines Associations (CREBA)
the Philippines www.phap.org.ph www.creba.ph
http://www.comddap.org Unit 502, One Corporate Plaza, 3/F CREBA Center, Don Alejandro
7/F, SEDCCO I Bldg., Rada St., 845 Pasay Road, Makati City Roces Ave.
Legaspi Village, Makati City (+632) 865-5600 cor. South A Street, Quezon City
(+632) 557-4589 phap7346@phap.org.ph (+632) 373.2270 to 75
info@comddap.org creba_national@yahoo.com
Philippine Independent Power
IT and Business Processing Producers Association Philippine Association of Water
Association of the Philippines http://pippaonline.org Districts
www.ibpap.org Unit 2408 24th Flr. Prestige Tower, http://pawd.org.ph
5th Floor, C2 Building, High Street F. Ortigas, Jr. Road, 2/F LWUA Building, Katipunan Road,
Central, Ortigas Center, Pasig City Balara, Quezon City
30th Street cor. 7th Ave., (+632) 633-3844 (+632) 920-5453 / 927-5053
Bonifacio Global City, Taguig City info@pippaonline.org
(+632) 817-2727
info@ibpap.org Philippine Iron and Steel Institute
http://philippineironsteel.org
Cement Manufacturers Association Suite 509 Cityland Shaw Tower,
of the Philippines
Shaw Blvd., Mandaluyong City
http://cemap.org.ph
(+632) 636-5263
Corporal Cruz St. cor. E. Rodriguez Jr.
Ave., pisisteel@yahoo.com.ph

Bagong Ilog, Pasig City


(+632) 671-7585 / 671-7586
cementinfo@cemap.org.ph

MULTILATERAL INSTITUTIONS
Asian Development Bank United Nations Development ILO Country Office for the
www.adb.org Programme in the Philippines Philippines (CO-Manila)
6 ADB Avenue, Mandaluyong City www.ph.undp.org www.ilo.org/manila
(+632) 632-4444 30th Floor Yuchengco Tower, RCBC 19th Floor, Yuchengco Tower, RCBC
Plaza, Plaza,
6819 Ayala Ave. cor. Sen. Gil J. Puyat 6819 Ayala Avenue, Makati City
The World Bank in the Philippines Ave., MANILA@ilo.org
www.worldbank.org/en/country/ Makati City
philippines
(+632) 901-0100
26th Floor, One Global Place,
registry.ph@undp.org
5th Ave. cor. 25th St., Bonifacio Global
City, Taguig City
(+632) 465-2500
comphilippines@worldbank.org

110 DOING BUSINESS IN THE PHILIPPINES


INTERNATIONAL SCHOOLS
The British School Manila German European School Manila International School Manila
www.britishschoolmanila.org European International School www.ismanila.org
36th Street, University Park, www.gesm.org University Parkway,
Bonifacio Global City, Taguig City 75 Swaziland Street, Fort Bonifacio Global City, Taguig City
(+632) 860-4800 Better Living Subdivision, Parañaque (+632) 840-8400
enquiries@britishschoolmanila.org City superintendent@ismanila.org
(+632) 776-1000
Brent International School Manila secretariat@gesm.org The King’s School Manila
http://brent.edu.ph https://kings.org.ph
Brentville Subdivision, Barangay Lycée Français de Manille Bradco Ave., Aseana Business Park,
Mamplasan, www.lfmanille.ph Paranaque City
Biñan, Laguna, 4024 Philippines 75 Swaziland Street, (+632) 519-5799
(+632) 779-5140, +63 (49) 511-4330 Better Living Subdivision, Parañaque admissions@kings.org.ph
to 4333, City
+63 (49) 544-5100 (+632) 776-1000
admissionsdirector@brent.edu.ph contact@lfmanille.ph /
communication@lfmanille.ph
Enderun Colleges
www.enderuncolleges.com
1100 Campus Avenue
McKinley Hill, Fort Bonifacio, Taguig
City
(+632) 856-5000
admissions@enderuncolleges.com
We are Quisumbing Torres.
Established in 1963, Quisumbing Torres has been advising many
of the most dynamic and successful business organizations in the
Philippines and overseas for more than 50 years.
With a team of more than 50 Philippine lawyers, we are a
full‑service firm, advising clients in the Banking & Finance,
Corporate & Commercial, Dispute Resolution, Employment,
Immigration, Intellectual Property, and Tax practice areas.
Quisumbing Torres is a member firm of Baker & McKenzie
International, a Swiss Verein with independent member law firms
around the world.

Our lawyers specialize not only from the standpoint of


the above practice areas but also from the perspective
of industries, including:

• Consumer Goods & Retail


• Energy, Mining & Infrastructure
• Financial Institutions
• Healthcare
• Industrials, Manufacturing
& Transportation
• Technology, Media & Telecomms

QUISUMBING TORRES
12th Floor, Net One Center
26th Street Corner 3rd Avenue
Crescent Park West
Bonifacio Global City
Taguig 1634
Phone: +63 2 819 4700
Fax: +63 2 816 0080 / 728 7777
112 DOING
Email: BUSINESS IN THE PHILIPPINES
QTInfoDesk@quisumbingtorres.com
Main Areas of practice
Banking and Finance: The firm handles manufacturing. The team provides advice on
project development and financing, asset and collective bargaining agreements, discrimination
balance sheet financing, finance lease, security and sexual harassment, trade union recognition
creation, securitization, insurance regulatory and procedures, executive termination and
bancassurance matters. employment litigation, among other general
employment matters.
Corporate & Commercial: QT’s corporate
and commercial team has extensive Immigration: QT provides legal services, advice
experience in cross‑border transactions and and representation to clients on all aspects of
multijurisdictional work, involving complex Philippine immigration, including obtaining
M&A, capital restructuring, establishment of all kinds of visas and immigration permits for
joint ventures, divestitures and other types expatriates. The team works closely with the
of reorganizations. The team is experienced Philippine Bureau of Immigration, Department of
in preparing and negotiating a broad range of Justice, Department of Labor and Employment,
commercial agreements and has lawyers with Philippine Economic Zone Authority, Board of
in‑depth knowledge in major industries. The Investments, Philippine Retirement Authority
group’s focus areas include: M&A, private equity, and other relevant government agencies.
competition and antitrust compliance, capital
Intellectual Property: QT offers legal services
markets, real estate, hotels, resorts and tourism,
on a range of IP matters, from counselling
infrastructure, energy and utilities, mining and
on registrability, conducting trade mark and
metals and natural resources, pharmaceuticals
patent searches, IP, copyright and domain
and healthcare, trade and commerce.
name registration and maintenance, to IP
Dispute Resolution: QT provides legal commercialization, protection and enforcement,
assistance in all forms of dispute resolution, including customs recordation and border control
from negotiation and mediation to arbitration actions. The firm advises on various areas of
and commercial, civil, criminal and administrative intellectual property law, such as licensing and
litigation. The firm has represented foreign and franchising, technology transfer, IP prosecution,
domestic clients in relation to disputes and IP litigation and enforcement actions, as well as
involving commercial, construction, energy, tort, data privacy and cybercrime.
customs, environment, product liability, tax and
Tax: QT’s tax lawyers advise in the areas of BPO,
regulatory issues.
information technology, telecommunications,
Employment: QT represents international and pharmaceuticals, manufacturing and mining
domestic companies in various industries, such industries. The firm assist clients in resolving tax
as, BPO, IT and telecommunications, financial and customs controversies before the relevant
services, pharmaceuticals and healthcare, and tax authorities.

DOING BUSINESS IN THE PHILIPPINES 113


The European Chamber of Commerce of the Philippines (ECCP) is
a service-oriented organization whose main goal is to foster close
economic ties and business relations between the Philippines and
Europe. The ECCP does this by providing a wide range of consultancy
services and by creating linkages between companies, organizations,
and individuals with existing or potential business interests in Europe
and the Philippines. It is also at the forefront of pro-business, pro-growth
advocacy in the Philippines, representing European business interests
for increased market access and trade facilitation, at the highest level
of Philippine political discussions.
The ECCP sees itself as the stepping stone for Europeans into the
Philippine market and for Filipinos into the European market.

114 DOING BUSINESS IN THE PHILIPPINES


What We Provide
• Business matching with clients, suppliers, distributors/agents, and partners
• Market intelligence briefings and research
• Access to live business opportunities
• Updates on the latest business developments and industry trends
• Assistance in internationalizing or localizing business
• Marketing and promotions opportunities
• Networking opportunities
• Customized training solutions

EUROPEAN CHAMBER OF COMMERCE


19th Floor, Philippine AXA Life Centre, Sen. Gil J. Puyat Avenue cor. Tindalo St., Makati City, 1200 Metro Manila, Philippines
P: (+632) 845.1324 • (+632) 759.6680 F: (+632) 845.1395 • (+632) 759.6690
A PROJECT BY CO-FUNDED BY EPBN PARTNER ORGANIZATIONS